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In today's NYT's "A Cancer Drug Shows Promise, at a Price That Many Can't Pay", CEO of Roche's pharmaceutical division and a member of Genentech's board, William M. Burns has the balls to tell everyone he's not concerned about his company's products saving lives. Like, duh, it's all about money:
"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".
Allow me to translate that for you.
"As we look at pricing these crucial, new drugs which we know will save lives, all we can think about is the bucket loads of money we stand to make. This is an excellent opportunity to get super rich off of a drug that's already on the market and already nearly paid for itself. Our target market will rise to a new 500,000 people (colon cancer, lung and breast cancer) each year just in the US! And we basically have zero competition! I love health economics! Rich, rich, rich - I'm going to be rich!"
Genentech is also the maker of Herceptin which it sells to breast cancer patients at a measly $40k per year. Which, by the way, you can get overseas for only $30k. The company's 9/30/05 10-Q indicates "COS as a percentage of product sales were 16% in the third quarter of 2005 and 17% in the third quarter of 2004. This decrease is primarily due to higher sales volume of our higher margin products (primarily Avastin and Herceptin)". Yes, COS goes down with volume which would leave room for the company to lower its price and still make as good of a net margin.
Because the actual cost of producing Avastin is a fraction of what Genentech charges for it, some analysts and doctors had expected the company to lower Avastin's price per milligram for use in lung and breast cancer.
But, Genentech will not be lowering its cost per unit. Lung and breast cancer patients were tested in clinical trials at a dose of 10 milligrams per kilogram of body weight whereas its original use, for colon cancer, is 5 milligrams but the company fears that doctors will prescribe it at a lower dosage, cutting into the executives' children's trust funds.
Dr. Desmond-Hellmann (the Genentech product development chief) said that Genentech was assuming that some cancer doctors might, in fact, use Avastin at the lower dosage to treat breast and lung cancer. That is a reason the company does not want to lower Avastin's per-milligram price, she said, because doing so would cut too deeply into revenues if doctors do not prescribe the higher doses that were used in the breast and lung cancer trials.
"Avastin is a superb drug, but its cost is already discouraging patients and doctors from using it," said Dr. David Johnson, who heads the cancer unit at Vanderbilt University and is a former president of the American Society of Clinical Oncology. "I wish it were one-tenth the cost, and if it were I would be giving it to almost everybody."
It will not be sold at one-tenth of the cost so yes, many of us will be going without.
Dr. Desmond-Hellmann said "I don't think any patient should go without a Genentech drug for an inability to pay... If this is about money, that would disturb me."
Well, be disturbed, honey. We expect you to disturbed all the way to the bank.
It's tricky because no one else wants to pay to research drugs other than drug companies, and then they get to set huge prices that make the drugs useless to the vast majority of people. Economists always say that after the patent expires, the drug will be cheap. How long is a drug patent anyway? 20 years? It's pretty much hopeless.
Posted by: Maxk on February 16, 2006 03:36 AMWell, it's not just the recouping of the investments. Some of these drugs are just incredibly expensive to produce in terms of ongoing labor and equipment investments.
Another big part of the problem in the U.S. is that European and Canadian price controls have shunted the costs onto Americans. So drug companies will sell the drug at or near cost in Europe, but then try to recover gains in the U.S. market, which is far less controlled.
"It's tricky because no one else wants to pay to research drugs other than drug companies"
Are you aware that WE pay for a lot of that research? Gov't funds our tax dollars to univisities to research cures and drug companies pick up development. Also, everyone makes a donation to their favorite cause, those monies are to fund research too.
When I lived in Germany I worked ata European pharma company that, to its dismay, did not do business in the lucrative US. There are still good margins to be had in Europe. No one's losing money in Rx business in Europe. It's just that in the US, they can charge what they want. So they do. Simple as that.
Some of these drugs are just incredibly expensive to produce in terms of ongoing labor and equipment investments.
That's not the case here. The costs to make those drugs are going down and will further as they produce even more as they welcome breast cancer and lung cancer victims into their web of further victimization.
Posted by: michelle on February 16, 2006 10:20 AMMichelle: Victimization? Cancer victims are 'victims' long before they start treatment for their condition. How does the fact that a company, which has invested a great deal of money in order to develop a drug that can give a cancer victim a chance of recovery, engaging in "victimization"?
Posted by: Jonathan on February 24, 2006 07:14 AM