[Analemma_]

I'm no fan of pharma industry but there's an unfounded and troubling assumption embedded in this comment: that any drug price over cost-to-manufacture can only be extortion. How do people recoup R&D costs (which are the vast majority of costs in getting a new drug onto the market)?

[asveikau]

Doesn't the government also fund a lot of pharma R&D?

Here's a 2019 article that came up in a Google search: Taxpayers funded this HIV research. The government patented it. Now a company profits https://www.latimes.com/business/la-fi-gilead-sciences-truva...

[pfisherman]

The government funds a lot of early stage preclinical research. These are the inexpensive stages of the pipeline.

As soon as you move into humans you can add another 2 or 3 zeros to your burn rate.

It is not politically feasible for the public sector to fund later stages. The numbers are just too big. Just think of the campaign ads that would run around $200M late stage failure funded by the government.

The reason why mega giant pharma companies exist is because they make enough money and are capitalized enough to withstand multiple $100M failures without going belly up.

[tptacek]

Taxpayers fund all sorts of stuff that is ultimately commercialized!

[asveikau]

So that's an argument that the government and the public should get a return on that investment, or profits should be constrained.

Or an argument against exclusive rights being in private hands.

[ToValueFunfetti]

The public gets access to a life-saving drug that otherwise would not exist, which is exactly what the government is paying for. You can reasonably argue they they should get more, but arguing that they should get some ROI is moot; they're already getting a tremendous ROI

[asveikau]

The public gets the privilege to be price gouged for stuff their taxes paid for. Doesn't sound like a good deal. Many will not have access at higher costs. Price gouging restricts access.

[ToValueFunfetti]

Are you saying the public would prefer that the drug not exist over the drug being expensive? If not, the public is getting a return. Like I said, it is reasonable to argue that the public deserves more return, ie. that it's a bad deal. But the argument that it's paid for by taxes and therefore should provide value to the public falls short of disagreeing with the status quo.

[BigJono]

What do you mean by "gets access"?

If the R&D cost (including amortised failures and whatever) for some hypothetical drug is $1B and the manufacturing cost is $100M for 100M doses. The drug should cost about $11 + a reasonable markup in a fully private system.

If the R&D costs are fully funded by taxpayers, it should cost $1 + a reasonable markup.

The public doesn't "get" anything if it still costs $11 (+markup) and a company is allowed to take a 1000% profit margin because they're only risking the $100M for the manufacturing.

[tptacek]

The R&D costs are absolutely not fully funded by taxpayers.

[heavyset_go]

> The public gets access

Just a reminder that on-patent Truvada cost $4,500 for a 30 day supply of a drug that needs to be taken every day.

[sudosysgen]

There is a limited amount of money we can spend on medicine. Every overpriced life-saving treatment kills someone who is in turn denied resources for another life saving treatment.

[sroussey]

Universities certainly do. IP transfer is big business.

Subsidies for oil, not so much.

[kiba]

The outcome for taxpayer ROI should be about the benefit to the public at large regardless of who commercialized it. Commercialization should eventually lead to better and cheaper version of the technology, which increases benefit to the public.

Of course, the people who worked to commercialize it deserve pay for their work, so the question is exactly how much.

[smt88]

I think it's perfectly fine to assume that it's a form of extortion to profit from life-saving products, which is why some people agree that pharmaceuticals shouldn't be a for-profit industry at all.

[WalterSear]

> the vast majority of costs in getting a new drug onto the market

Debatable.

> according to these firms' annual reports, 16 percent of revenues was taken as profit, and • 31 percent went for marketing and administration. That's nearly three times as much as their R&D spending.

https://www.bu.edu/sph/files/2015/05/Pharmaceutical-Marketin...

[Auracle]

Marketing gets them more money, which then increases the amount they can put into R&D. They aren’t spending on marketing without expecting a return.

[sethammons]

They shouldn't make tv ads; they should be in a white paper that doctors read.

[Auracle]

Maybe, but even people with chronic conditions might not go to doctors often. They see an ad for a new medicine for their disease, they go to the doctor, it works better, and hooray.

Maybe doctors should be able to send out email blasts to people, but I'm guessing that's not HIPAA friendly. Also, I've had online ads aimed at oncologists served to me for different medications.

I think the fact that there are both TV ads for cancer medications and online ads aimed at oncologists says a lot about the fact that a ton of doctor's aren't keeping up with what's new, even in something as critical and limited in scope as specific cancers are.

[WalterSear]

R&D is still not where the vast majority of their money is spent.

[chimeracoder]

Gilead's R&D costs for Truvada as PrEP were literally almost zero. They paid none of the costs for actually conducting the trials.

Their only contribution was that they donated the actual pills used in the trials - in other words, the unit price of 30 pills per person for the duration of the trial.

PrEP has been pure, risk-free profit for Gilead.

[jayshua]

Gilead claims that is false and that they spent 1.1 billion on developing Truvada. https://www.gilead.com/news-and-press/company-statements/gil...

[chimeracoder]

> Gilead claims that is false and that they spent 1.1 billion on developing Truvada. https://www.gilead.com/news-and-press/company-statements/gil...

You are quoting a corporate press release that was written in response to an editorial criticizing Gilead, which was based on my colleagues' work.

This is a great example of how easy it is to fall for propaganda, because not a single thing in your link refutes what I said! They spent money developing Truvada as a treatment for HIV, then made that money back in record profits for nearly a decade. Only then did clinical trials for PrEP begin, and for those, Gilead donated only the production costs of Truvada (which are minimal). They did not spend any money in actually conducting the trials - which, as pharmaceutical companies are generally very quick to point out - is where most of the costs of bringing a drug to market are.

Gilead is claiming that, when it spent half a billion dollars to acquire a biotech company that went bankrupt, 100% of the money in that transaction should as "R&D related to Truvada". This is preposterous. Neither the SEC nor the IRS would endorse that accounting, which is why you're seeing it in a press release and not their 10-K.

That's a ridiculous claim even when you're talking about the development of Truvada, but that's not even the question at hand. The actual topic is how much was paid for the development of PrEP, which came nearly a decade later, and for which Gilead paid nothing but the per-unit costs of production.

[comex]

The $1.1 billion figure is for Truvada total, not for PrEP specifically. It’s perhaps notable that Gilead chose not to break that down, given that the original claim they were responding to was about PrEP specifically.

[chimeracoder]

> The $1.1 billion figure is for Truvada total, not for PrEP specifically. It’s perhaps notable that Gilead chose not to break that down, given that the original claim they were responding to was about PrEP specifically.

And even then it's a dishonest claim. Half of that $1.1 billion is the amount of money they paid to acquire another biotech company in a firesale. It's beyond disingenuous for them to claim all of that towards the amount they spent developing Truvada, since they received way more assets in that sale than just the patent for one drug.

[yieldcrv]

Although this is a discussion about costs

I just want to point out that the government has assumed the role of telling everyone how to take risks for its economy, and literally all you have to do is do that, successfully, and it will privilege your rewards by reducing risk on profits or reducing taxes

This is not controversial when you look at the state’s role in these outcomes

[mock-possum]

It’s life-saving medication. It should be freely available to everyone, period.

If we’re not willing to question the degree to which big pharma ought to profit off of controlling access to scientific miracles, the least we could do is use taxes to subsidize the cost - “I can’t afford it” should not be a reason to not be on PrEP.

Anyone should be able to walk into a CVS and walk out with 2-1-1 dose, as easily as they’d pick up the morning after pill, or a bottle of aspirin.

[scotty79]

To find the correct pricing you just check how much shareholders make. If they get unreasonably high return on their investment that means the company is overcharging.

Tax shareholders on their gains and rebate customers if the company doesn't adjust the price.