Merck Sells Federally-Financed Covid Pill for 40 times What It Costs to Make(theintercept.com)
theintercept.com
Merck Sells Federally-Financed Covid Pill for 40 times What It Costs to Make
https://theintercept.com/2021/10/05/covid-pill-drug-pricing-merck-ridgeback/
20 コメント
If it prevents someone from dying, or even reduces ICU or hospital stay by one day, then it's worth it for that person at least.
It's a windfall for Merck (and their shareholders) but I could still imagine it saving tons of money for taxpayers and people who pay for health insurance.
It's a windfall for Merck (and their shareholders) but I could still imagine it saving tons of money for taxpayers and people who pay for health insurance.
The problem is paying for the drug. We lack socialized healthcare in the US. How many people will forgo treatment because they don't have $700+ for a pill. By the time the patient is in bad enough shape to be willing to beg/borrow/steal $700, it's too late for the treatment to be effective.
Biden could force Merck to product this at cost through the Defense Production Act, but I doubt that will happen because Pharma companies are the primary advertisers of the corporate media.
I would be interested to hear more about the development of the drug, (How much of the total research costs were born by the government? Did the government start the research, or merely contribute funding to an extant program?) and what specifically Ridgeback & Merck did "to develop the drug as a Covid-19 treatment". (Was this drug an obvious candidate for a COVID treatment, or are we only getting it because of Ridgeback?)
If the article's depiction of the situation (i.e. if the government really paid for the bulk of research, and these companies just swooped in to claim the rewards without much of a contribution) is accurate, then it seems like it would make sense to limit them to some reasonable markup.
The root issue here, as far as I can tell, is that government institutions license its IP without protecting the public interest in what is, effectively, public property.
If the article's depiction of the situation (i.e. if the government really paid for the bulk of research, and these companies just swooped in to claim the rewards without much of a contribution) is accurate, then it seems like it would make sense to limit them to some reasonable markup.
The root issue here, as far as I can tell, is that government institutions license its IP without protecting the public interest in what is, effectively, public property.
Based only on the timing, it appears the initial drug development (which pre-dates COVID - drug was developed to treat other infections) was funded by the government. Ridgeback licensed the drug, then ran COVID trials. Merck then licensed it and plans to market and produce it.
The COVID trials had costs. Marketing had/has costs. But do those costs come anywhere near 40x the production cost? That I don't know, but I doubt it.
As you note, the government should retain some ownership in drugs it funds. Or, the contract language should ensure the drug is sold for a reasonable cost. That would prevent this from happening.
The COVID trials had costs. Marketing had/has costs. But do those costs come anywhere near 40x the production cost? That I don't know, but I doubt it.
As you note, the government should retain some ownership in drugs it funds. Or, the contract language should ensure the drug is sold for a reasonable cost. That would prevent this from happening.
Doesn’t seem that unreasonable. $712 for a course of medicine that reduces the death rate from COVID-19 by 50%?
The $17.74 they are comparing it to ignores the need to pay for R&D. How would drug companies pay for all the trials and science to bring new drugs to market (including the many candidates that fail but still required investment to see if they would work) if all drugs were sold at “cost” ignoring the investment of creating the IP in the first place?
The $17.74 they are comparing it to ignores the need to pay for R&D. How would drug companies pay for all the trials and science to bring new drugs to market (including the many candidates that fail but still required investment to see if they would work) if all drugs were sold at “cost” ignoring the investment of creating the IP in the first place?
This argument makes sense in the normal course of drug development, but drugs which are financed by the federal government like here (to what extent the tens of millions the government gave amounts to the full cost of R&D I don’t know) should not be allowed to be sold back to the American public above cost. We paid for (a portion) of the R&D already, pharma companies should not be allowed to charge us again.
The article states significant costs were borne by Merck and the associated company as the US government (BARDA) declined to fund the development of the drug.
If the drug development had been fully funded by the US government, I’d see a stronger case. Instead, it seems like the funding here is via a pre-purchase agreement at $712 per course. We’ve essentially funded it for poor countries too because the article mentions the drug is being immediately licensed in India as a generic at $12.
If the drug development had been fully funded by the US government, I’d see a stronger case. Instead, it seems like the funding here is via a pre-purchase agreement at $712 per course. We’ve essentially funded it for poor countries too because the article mentions the drug is being immediately licensed in India as a generic at $12.
How much of the R&D was financed by taxpayers? Seems like it should be a proportional ownership stake, not all or nothing.
What it costs to fabricate the pill/tablet? Or 40x what the sum total of the R&D costs were?
Either way, that doesn't sound too bad. I must be missing something.
Either way, that doesn't sound too bad. I must be missing something.
1) The marginal cost to produce something is a fraction of the cost of bringing something to market. Here's an analogy from the car business: Merck buys the blueprints for an experimental vehicle that seems promising but may or may not be useful, Merck spends $ to test is rigorously, develop the factories to bring the vehicle to production, acquire necessary signoff from regulatory bodies, distribute the vehicle through its logistics/retail network, support the vehicle, etc. All of these things have costs.
2) Almost no one pays anywhere near list price. In the US: Not the ~20% of people on Medicaid, not the ~20% on Medicare, not the ~50%+ on private insurance, and frankly not the <10% that are uninsured. You pretty much have to be well off, uninsured, and also not use a discount program to be charged list price. Also definitely not the rest of the world.
3) Merck partnered with Ridgeback, who had already licensed it from a non-profit group drug discovery group at Emory University. The terms of that agreement are unknown, but presumably the $ will go towards funding future drug discovery.
Finally, assuming Merck does do all this profitably, the return to the US gov't will be massive. Merck has paid an avg of 18.4% income tax over the past 4 years. They also employee 70k+ employees who are paying taxes, etc, etc. If Merck can get the product to market faster (which they'd be highly motivated to do), the benefit to the US people and economy would be far greater than the cost of treatment.
2) Almost no one pays anywhere near list price. In the US: Not the ~20% of people on Medicaid, not the ~20% on Medicare, not the ~50%+ on private insurance, and frankly not the <10% that are uninsured. You pretty much have to be well off, uninsured, and also not use a discount program to be charged list price. Also definitely not the rest of the world.
3) Merck partnered with Ridgeback, who had already licensed it from a non-profit group drug discovery group at Emory University. The terms of that agreement are unknown, but presumably the $ will go towards funding future drug discovery.
Finally, assuming Merck does do all this profitably, the return to the US gov't will be massive. Merck has paid an avg of 18.4% income tax over the past 4 years. They also employee 70k+ employees who are paying taxes, etc, etc. If Merck can get the product to market faster (which they'd be highly motivated to do), the benefit to the US people and economy would be far greater than the cost of treatment.
If we're using the car analogy- According to google the profit margin for a car is something like 5-12%, not sure if that includes R&D or not. That's a far cry from 4000% regardless, even if you bring it down by orders of magnitude to account for things you mentioned. You'd think a healthcare company would have some moral imperative to run a relatively thin margin, and maybe not spend 6.5B a year on advertising and god knows how much on greasing up the government for regulatory capture
And yes insurance would cover these costs for most people, but we still end up paying through for it through exorbitant premiums
And to your final point, yes corporate profits benefit the government because they get taxed. That doesn't mean corporations should be able to form cartels, corner a market, and then jack up the price on essential goods and services to make that profit
And yes insurance would cover these costs for most people, but we still end up paying through for it through exorbitant premiums
And to your final point, yes corporate profits benefit the government because they get taxed. That doesn't mean corporations should be able to form cartels, corner a market, and then jack up the price on essential goods and services to make that profit
A better analogy is entertainment: it costs nothing to create another copy of a blockbuster film. But that doesn’t mean it cost nothing to produce to first copy.
Merck's average net income over the past decade or so is ~15%. Ford's is ~2%. So true, Merck could lower prices across the board by ~15% and then they'd break even. But in that scenario investors would have less inclination to invest in drug development, and we'd have worse drugs and healthcare overall.
On the exorbitant premiums. Agreed, but this is essentially a tax on people that have private insurance and/or pay taxes (skewed greatly to the top earners in the population). There is a lot of fat in the healthcare system, all of which is a tax on US taxpayers, but directing the blame at big pharma is missing the forest for the trees. The amount doctors earn is a larger contributing factor to our healthcare costs vs EU for example.
On the cartel comment, Pfizer and others have similar oral anti-virals in development. Competition incoming. If we didn't have this for-profit system, it's unclear if we'd have multiple drugs in development.
On the exorbitant premiums. Agreed, but this is essentially a tax on people that have private insurance and/or pay taxes (skewed greatly to the top earners in the population). There is a lot of fat in the healthcare system, all of which is a tax on US taxpayers, but directing the blame at big pharma is missing the forest for the trees. The amount doctors earn is a larger contributing factor to our healthcare costs vs EU for example.
On the cartel comment, Pfizer and others have similar oral anti-virals in development. Competition incoming. If we didn't have this for-profit system, it's unclear if we'd have multiple drugs in development.
They're going to sell this pill for the same price as a single IV bag of saline at a hospital? Way to go Merck!
Tell me this is ivermectin without telling me this is ivermectin
New Microbes and New Infections: Ivermectin: a multifaceted drug of Nobel prize-honoured distinction with indicated efficacy against a new global scourge, COVID-19 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8383101/
> During mass IVM treatments in Peru, excess deaths fell by a mean of 74% over 30 days in its ten states with the most extensive treatments.
> During mass IVM treatments in Peru, excess deaths fell by a mean of 74% over 30 days in its ten states with the most extensive treatments.
It is completely different compound. Check Wikipedia for both chemicals to see the difference.
[1] https://www.fiercepharma.com/pharma/merck-ceo-ken-frazier-ge...
[2] Before the trolls arrive: Yes, I know you can get a GTT 165 for $26.9M, but it lacks the Speed Package (2x MTU 16V, 1,790 kW). Might as well buy a rubber boat.