The way the system is set up, if the drug is FDA approved, insurance companies and medicare basically have to pay for it, regardless of the price. The drug companies are testing exactly how far they can push this before the system changes. So far it has remained resilient.
From the article: "Jefferies had estimated peak sales of... $250 million to $500 million for postpartum depression."
How much does it cost to bring a drug to market and then manufacture and distribute it? If it was a $6 pill, this would simply have never been developed, let alone distributed to struggling mothers.
I think the high cost of drugs is a symptom of an ignored issue. The fact is that it costs an eye-watering sum to get something to market. Obviously not all of it is remediable, after all, someone still has to do the biology and science work in a state of the art lab to invent these things. But some of it is remediable. I remember a press conference by the head of the FDA during Covid, who proudly stated that the vaccine was going to be approved 10x faster than other drugs without compromising safety or efficacy. That's great! But if we aren't sacrificing safety or efficacy and getting new drugs 10x as fast, why isn't that standard operating procedure?
If it were to cost only $20m or $50m or $100m to get a new drug to market instead of up to $2 billion (current avg cost estimate per CBO.gov website), I imagine drugs would start at lower price points, and even if the free market didn't do its thing, regulating prices would be easier without defacto banning new drugs.
But this is just a simple economic argument. I am not a biochemical researcher, and I don't want Thalidomide to happen again. But as long as it costs $3-$10 billion to break even on new drugs, (let alone profit) I don't see how drug prices can get lower. It's just math.
The money they spend on sales and marketing won't include the $263 million they spent bribing law makers (they have three lobbyists for every member of Congress) or the dark money they're spending on bribes we're not even allowed to know about.
They also spend money making tiny tweaks to existing drugs that work just fine for the sole purpose of extending their patents and keeping drug prices as high as possible (https://en.wikipedia.org/wiki/Evergreening)
A lot of basic research is government funded, i.e. grants for ongoing research at public universities, but except in extreme outlier cases like the global pandemic, private biotech companies don't get free government handouts for their drug research, and certainly not in meaningful amounts. For perspective, privately funded medical research spend is more than 5x the total NIH budget, and only a portion of the NIH budget actually goes to drug research.
They indeed do get plenty of free government handouts for R&D. Their labs take a fortune in NIH grants. Sure, a lot of that is to public institutuions but plenty goes to private labs.
That says nothing about system bandwidth: if normally they would approve 10 drugs in N months, but now they threw all available resources on one project to get N/10, it would make sense.
So the median pharma industry profit margin is 13.8%. Forget lowering it to fortune 500 average... take it zero. How much lower do drug costs get? Not much. This pill is still going to cost many thousands of dollars.
Any solution will require targeting multiple sources of cost. As you point out elsewhere, R&D is a big cost driver, but profit seems comparable [1]. Moreover one does have to wonder about the various sources of that R&D cost, I'm not an expert but it would seem to me that issues like "evergreening" would inflate development costs unnecessarily.
1. It is not the price of the pill. It is the price of the entire 14 day course.
2. There are only 500K or mothers who suffer from PPD each year in USA. May be 200K or so of them would actually be willing to take medicines. And if the course costs say $100 then it would be $20M in revenue. Do you really think it is possible to run it profitably while employing 100s of people making and testing and distributing these pills ? Especially given that infants are involved ?
For 16k you could hire a full time nanny who helps the mother care for the newborn in the first weeks/months. How effective is the drug in comparison to providing assistance like that?
Stop trolling. Everything I said is true. The very expensive drugs you're seeing in the US are generally ones that won't be available in Europe for a long time, no matter how much money you bring to the table. If you really want them, you'll end up spending more money than your American counterparts because you'll also have to buy a plane ticket to fly over.
Then take the success probability and multiply it by the value a woman would expect from being free of PPD. I'd wager it's still considerably higher than $16k.
I'm noting it's less clear than other expensive things like the meds that cure hep c. In that case, you're weighing the cost of a near certain cure. I've not seen any sort of depression med with that kind of clarity of effectiveness.
The FDA's press release didn't say anything about the success rate, only that the test group had significantly lower levels of depression than the control group. It's true that a lot of antidepressants fail to improve symptoms in a lot of people. The effectiveness of this particular drug better be outstanding, otherwise Biogen-Sage won't be able to justify the high price compared to other antidepressants.
The price of the pill must be weighed against the effectiveness of the pill. A 15k treatment can't just be 10% better than placebo to be cost-effective, it needs to be better than any other use of 15k to be justified.
Private doesn't beat public "massively" but probably comes out around 2:1. I'd say that's "solidly" but certainly not all the way to "massively". Further, that's a lot of public money, and there are plenty of private drugs that came out of that money.