This was brought to my attention by Katherine A. O'Neill, Ph.D., member of the PHARMA-MKTING online discussion group, who posted this comment today:
I have spent a lot of time defending the ethics of my industry - the pharma industry. But when I read the front page of the NY Times this morning, I felt sick. $100,000 per year for Avastin for colon cancer. It is unconscionable. When pharmaceutical companies do this kind of thing, they are ASKING for government imposed price controls. Genentech has no ethics. Even if, as they claim in the article, the 'economics' hold up, there is no justification for this kind of price. Shame on Genentech for being greedy. Double shame for holding patients with life-threatening diseases hostage.Supersizing Profits
It seems that Genentech is copying the fast food industry's ploy of "supersizing" servings in order to maximize profits. That practice was exposed in the film "Super Size Me" in which Morgan Spurlock -- the movie's director, writer, and principal actor (I loved his doc: "You're going to die!") -- only ate fast food products for one month and, if asked by the teenager manning the order window if he wanted to "supersize that order", he always said "yes!"
Genentech has been selling one year's worth of Avastin to treat colon cancer for $50,000. The "supersized "dose for lung and breast cancer is two times the colon dose -- costing, if my math is right, $100,000 per year. Just like the extra fries and Coke, the cost to produce the additional dose of Avastin is "minimal" according to the article on this subject in yesterday's NY Times (see "A Cancer Drug Shows Promise, at a Price That Many Can't Pay").
It's the Value Stupid!
The industry once defended high drug prices as the only way it could recoup the cost of research and development. However, that has been pooh-poohed by critics and at least a few past and current drug company CEOs have backed away from that defense (see "Vagelos Speaks. Will Pharma Listen?" and "McKinnell's Mea Non Culpa"). [Tom McKillop, former CEO of AstraZeneca, however, insists that the industry needs to talk more about its R&D efforts, not less (see "Pharma's Jekyll & Hyde").]
Another pharma CEO had this to say: "As we look at Avastin and Herceptin pricing, right now the health economics hold up, and therefore I don't see any reason to be touching them," said William M. Burns, the chief executive of Roche's pharmaceutical division and a member of Genentech's board. "The pressure on society to use strong and good products is there." [NY Times]
"Health economics" is what he said. In other words, how much value do we place on prolonging the life of a patient by a few months? That's a hard argument to go against -- you would be better off advocating drowning puppies than to suggest that a few months of extra life is not worth $50,000 to $100,000 (or $10,000 to $30,000 in copays).
Speaking on the drug value issue, Roy Vagelos, former CEO of Merck, had this to say: "Most drugs on the market have tremendous value and are priced right. We have outliers, however, that are going to kill us," warned Vagelos. He mentioned cancer drugs that are sold for $50,000 that deliver only 4 months of added lifespan on average. "I think that is very damaging," Vagelos said, "and does not follow the value line."
This topic will generate a long discussion thread on PHARMA-MKTING. Already, as I write this, responses to Katherine's initial post are coming in. Here's one from Sameer (these are professional marketing people, not namby-pamby consumer advocates with axes to grind):
Where is the rationale for this pricing?? I can understand that one may ask for a higher pricing for a biological with 100s of excuses related to its manufacturing and cost of raw material. BUT when the drug is a "small molecule" and chemically synthesized, its cost of development and trials are almost the same as any other product. Taking this logic into account, why on earth one takes the advantage of a dying person?? Just because the drug will give another 5-6 months of life and the person/family do not have any other way but to pay for any crazy amount fixed by some greedy bunch, to make someone live for another 5-6 months??Supersize for the Wealthy
I strongly feel that there has to be some rationale (rather sanity) for the pricing of drugs and governments should interfere/protest/force the companies to stop their monopoly and greedy attitude, maintaining the ethics of this noble industry. I won't be surprised when people will start calling pharma people as a bunch of greedy robbers!! Not only robbing money but also robbing humanity and happiness.
I'd like to close with this thought -- I contend that Genentech and other pharma companies are moving to develop products only the "well off" (successful Gen Xer's no doubt) can afford (and there are quite a few of those people to cater to). Even with a good drug coverage plan, it would cost patients tens of thousands of dollars out of their own pockets (or "Consumer Directed Health Plans" in the future) to pay for these drugs.
Genentech only needs 70,000 Avastin patients to meet Wall Street projections of $7 Billion per year in sales for Avastin. Meanwhile, as the Times article points out, many other people are not able to pay. Considering that there is a potential market of hundreds of thousands of patients that could use Avastin, I just don't get the "health freakonomics" that justifies the price of $100,000.