Comment by eterm
1 year ago
> But Revlimid is also, I soon learned, extraordinarily expensive, costing nearly $1,000 for each daily pill.
Thanks to the bargaining power of my nationalised healthcare, my government pays around 1/5th of that, and I'll pay nothing myself.
Revlamid is listed under it's generic name Lenalidomide, price is in pence: https://www.drugtariff.nhsbsa.nhs.uk/#/00791628-DD/DD0079145...
Even that is still an obscene amount if money for something that cost 20p per pill.
The manufacturing cost of a 20p pill has literally nothing to do with its price.
Yes I know. And that is, in my opinion, a problem.
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So $200/pill for something that costs them $0.25 to make. That's still obscene.
the way I'd look at is what's the return-on-capital for pharmaceuticals as a whole.
Generally I think (this is highly subjective and irrational, of course) that I'd be comfortable with a 10%-20% return-on-capital overall. Lower than that and I'd think that risky drugs couldn't get funding; higher and I'd think there's too much rent-seeking.
Perhaps some economists have studied what an optimal ROC might be for pharmaceuticals.
In any case, the gross margin per-pill doesn't really tell you anything about ROC. 99.875% is astounding, but what was invested to get to that point - including the drugs that never made it to market?
> Celgene said it spent $800 million to develop Revlimid and spent several hundred million more on additional trials to study the use of the drug in other cancers. Those combined figures represent about 2% to 3% of Revlimid sales through 2018.
These guys are making 300% ROI in annual revenue from their one-time investment into R&D. In order for that to be fair (in line with your 20% average ROI target), they would need to be testing 15 new drugs per year, and if all of the others had failed, then it would be fair to markup the one that succeeded by this amount. But according to the Wikipedia page, the company has investigated less than 10 drugs in their entire existence, much less 15 drugs per year.
Which is why there should be no patents in healthcare. Most research is already publicly-funded, production and distribution should be too. We could drown in cheap medicine, instead we artificially increase the prices by 5000% to fatten the pockets of already super-wealthy parasites.
Are you thinking this through? It costs billions of dollars to bring a new drug to market --- before sales, admin, and marketing costs --- and most attempts to bring drugs to market fail. In the very best case for the public, the drugs are incredibly cheap to manufacture; that's an achievement for a pharma company. Do you see how the incentives work here?
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