Replies to post #195722 on Biotech Values

[iwfal]

You probably think I’m overdoing this, but I consider #msg-80935662 (the message I’m replying to) one of the seminal posts in the iHub archive.

Not at all. If nothing else it is clearly important for the effect it has on the biotech stock prices as it keeps coming up in the news.

But it is a hard problem to solve without a central negotiator capable of just saying some drugs won't be on formulary. Period. Especially hard without even a squishy benchmark (like QALY) that allows comparison across diseases (a little like competition even in diseases where there is no competition).

To solve it without those tools (which seem to be largely impossible in the US) you need to either piggy back on countries that can solve it (e.g. David Millers suggestion) or fix all the things that enable shadow pricing (a kind of collusion but via signals like those in the card game bridge).

BTW - the even more interesting problem is solving the larger medical cost problem since drugs are just a small part of the increase in medical care costs that have increased faster than inflation for decades. E.g. MD salaries for instance (especially specialist) - apologies to all the MDs reading this but the party can't go on forever (interestingly I know several MDs who left private practice for Kaiser even though they make less money - because is just plain more enjoyable).

[poorgradstudent]

Drug Pricing:

The strange irony is, despite the current upheaval, I thought the system was largely working the way I'd like it to. I've posted here before that I'm supportive of pricing power for efficacious drugs because, in the long term, society pays an upfront price for a long term benefits. I consider the eventual availability of generics as the commensurate benefit in exchange for the run of relatively higher priced branded drugs.

Case in point, I think the "outrage" over Gilead's pricing of HCV drugs is just shortsighted folly. In the long run, this is a small price to pay for the societal benefit.

Sadly, Shkreli's intention of abusing the system (yeah I said it) now has people focused with the aim of reacting rather than properly assessing. I hope we can get over this bump without adversely impacting the sector in the long run.

[DewDiligence]

More factoids on US drug prices:

http://www.reuters.com/article/2015/10/12/us-pharmaceuticals-usa-comparison-idUSKCN0S61KU20151012

U.S. prices for the world's 20 top-selling medicines are, on average, three times higher than in Britain, according to an analysis carried out for Reuters… U.S. prices were six times higher than in Brazil and 16 times higher than the average in the lowest-price country [among the countries studied], which was usually India.

…U.S. prices for top brand-name drugs jumped 127% between 2008 and 2014, compared with an 11% rise in a basket of common household goods, according to Express Scripts, the largest U.S. manager of drug plans.

…Many of the biggest differences were evident for older drugs, reflecting the fact that prices are typically hiked each year in the United States…