[exhilaration]

I'm confused, they say it was priced at $1 million because that was what they felt the drug was worth compared to the ongoing therapies needed to keep these patients alive. Ok fine. But once it became clear no one was going to pay that price, wasn't there some lower price that would still earn them a profit?

[dodobirdlord]

Probably not, the article mentions that the genetic mutation effects about two or three people out of a million, so that’s ~20,000 doses required to cure everyone in the world. The vast, vast majority of those people are going to be people without insurance or government provided healthcare that would ever pay enough to make a difference, so they’ve got to recoup their entire R&D expenses selling the 2,000-3,000 doses required to treat the combined population of the first world, and then maybe provide it for ~free to the rest of the world where there’s no chance of making any money anyway, as is generally the case with all expensive drugs.

If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it.

[bryanrasmussen]

>If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it.

sure a chance in that it is not impossible the same way that a talking centaur with the ability to blow up planets with its mind is impossible, but given what we know about economic reality it is practically impossible that the million dollars per patient will be paid.

There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad.

Also tax writeoffs exist, so I'm not sure what that R&D actually cost them?

[dodobirdlord]

> There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad.

They are a drug development company, marketing their drugs to national government health services and private insurance companies. This is an iterative game, in game theory terms. Caving and selling at a loss just guarantees that counterparties will refuse to buy at the stated price next time too, and wait for them to cave and sell at a loss. Sitting on the drug until the parents expire and losing the entire investment rather than selling at a loss has the benefit of proving seriousness in future price negotiations.

And the article mentions that the ongoing care costs for someone with this disorder is hundreds of thousands of dollars per year. In the years since they refused the $1M price tag in an attempt to drive a hard bargain, the national governments and private insurance companies have no doubt spent more than $1M per patient they refused to buy a dose for.

Hardly seems like planet-destroying centaur levels of implausibility that they may eventually come around to the idea that $1M was actually a perfectly reasonable price, given the circumstances.

> Also tax writeoffs exist, so I'm not sure what that R&D actually cost them?

I think you have some major misunderstandings about what tax writeoffs are and how they work.

[bryanrasmussen]

>In the years since they refused the $1M price tag in an attempt to drive a hard bargain, the national governments and private insurance companies have no doubt spent more than $1M per patient they refused to buy a dose for.

I wouldn't make the assumption on that, given the disease is potentially deadly. I would more likely make the assumption that the private insurance companies especially did the math and figured they end up a couple hundred thousand ahead in the most likely scenarios. But I'm prone to cynicism.

>> Also tax writeoffs exist, so I'm not sure what that R&D actually cost them?

>I think you have some major misunderstandings about what tax writeoffs are and how they work.

perhaps, but I do experience that sometimes in my business it can make sense to spend money on things and make less profits in order to have less taxes to pay, on paper things might look worse off but I somehow feel that I'm doing better nonetheless.

[bryanrasmussen]

obviously comparing my business as a consultant to a pharmaceutical company is like comparing a single raisin to a field of watermelons, but I am of the opinion based on reading that the benefits of spending money to reduce profits and taxes seems to be greater the larger the business, and thus that the principle must hold.

[dodobirdlord]

Business losses offset profit, rather than taxes owed, and though losses can be carried forward for years to offset taxes, a company does at some point need to turn a profit for the tax benefits of its losses to matter at all. The article mentions that the company took investor money for this, and it seems to be a fairly small pharma R&D company, so I doubt they have some pile of other successful drugs that they are offsetting these losses against.

But moreover, losing money for tax purposes only makes sense in a narrow window dictated by tax rate. Leaving aside tricky confounders like government R&D grants, if your corporate tax rate is say, 10%, and you have an investment opportunity that won’t turn a cash profit but will grow the value of your business by 95% of what you invest, it can make sense to make an unprofitable investment and lose 5% on it over realizing the profits, paying taxes, and losing 10% on it. But for this to make sense you have to have an investment opportunity that already very close to breakeven, corporate tax rates aren’t that high. And just throwing money away to count the losses on your taxes never makes sense.

[buryat]

next question would be why governments themselves don't develop those drugs. I'm for the free market however bad it's in this case, unfortunately/fortunately it's the best instrument we got

[5tefan]

Means they recover non through this drug and recover all RD through other drugs.

And let's not forget that this business often operates with sickeningly huge profit margins.

[s1artibartfast]

>And let's not forget that this business often operates with sickeningly huge profit margins.

This is grossly misinformed

Looking at the UniQure Tax filings for 2020, They had 37M in revenue, -122M in R&D expenses, and -42M in general expenses, so they were -125M in the hole that year.

https://uniqure.gcs-web.com/static-files/8f960e6d-c40c-474e-...

[5tefan]

I work in finance and of course it is not true for every company and I didn't refer to them.

From a collegue I know that they purged drugs from their portfolio because it made less than <80% net profit.

But you are right. It is very different.

[s1artibartfast]

Who are you referring to in your 80% example? Also, what do you mean by purged? Do you mean stopping manufacturing of an approved product?

No company is gonna cut a an approved drug with hundreds of million in net profit because the % profit is <80. I could see them cutting drugs if the total profit is low tho. This helps them focus on other more profitable drugs with. That is to say, most companies don't want to be making 100 products that net low millions each. They want a few products that make 100 million+ each.

[5tefan]

I will not disclose the company name.

With purged I mean exactly this. Purged. 80% was low from their point of view. Don't know how many products they had. Couldn't believe it at all.

[joe_the_user]

It's a matter of principle. Perverse principle but principle: "Why would we? [lower the price] Pricing shouldn't be a political decision. It should be a rational decision based on merits and values," he said. "Hundreds of millions of investor money has gone into the company, and if there is no return for those investments, there will be no new drugs because nobody's going to do that in the future, right?""

Which is to say that you have an investor group that expects to either be paid or they'll take their medicine away and the public be damned.

Or perhaps a perverse process. The system is how you get new, actually amazing drugs. The system is also how actual health care has become really terrible in the US in particular.

[nine_k]

Buying the rights on drugs like this, and more important expensive drugs, an license them under a freedom-protecting license (similar to GPL) could be a major application of charity funds.

[s1artibartfast]

You would still have to raise several hundred millions of dollars of funding to reconduct development and clinical trials for the drug after securing the IP.

Clinical trial data and manufacturing know how cant be leveraged from the original approval.

It is incredibly difficult to get investors to fund a second round of development for a product that made it to market and still failed.

You might say this is an opportunity for the government to step in as investor, but they have little interest, knowing that they could use the same money to save many more lives in other areas.

[s1artibartfast]

The investors didn't want to risk throwing more good money after bad.

No other companies were interested in buying the drug and it required more costly trials and upkeep.

You drop the price and buyers are even less interested, meanwhile the costs keep coming in.

I think the mistake people are making is assuming the drug was in a position to be revenue positive at a lower cost when it wasn't.

[spoonjim]

There's also the very small market for the drug. There's a lot of administrative and logistics cost in making a drug available on the market. If they could sell 1,000 doses a year they would have found a price that worked.