Tuesday, March 29, 2011

Ed Silverman, On The State Of California's "Moral Suasion" & Merck's AIDS Drug Pricing

Pharmalot has a terrific piece out on the relatively high price of all AIDS drugs, inculing Merck's Isentress® -- and the accelerating efforts in California to make the durgs more affordable for people of limited means -- do go read it all (very solid stuff):

. . . .California State Controller John Chiang sent a letter to. . . . Merck [and nine other AIDS drugmakers]. . . .

In each case, Chiang wrote that California’s ADAP program has experienced a 257 percent increase in AIDS drug spending since 2000, more than three times the rate of client growth over this same period. The state is “faced with either racheting down access to ADAP or cutting other vital health services to offset the cost of ADAP,” he wrote the drugmakers, adding that supplemental agreements with several drugmakers expire this year, contributing to the financial pressures on the states.

“These increases not only put an undue burden on people seeking treatment, but place an unsustainable burden on states. California cannot afford to increase the budget for ADAP indefinitely in order to pay for higher drug prices. Nor can the state be put in the position of denying other essential health services in order to pay increasing drug costs. . . .

Indeed -- this is an important issue -- one which will garner increasing attention, as state health care budgets continue to constrict. Do stay tuned.


Anonymous said...

So, if I follow the math, the number of patients served has doubled, but the total cost has quadrupled. Thus the price per patient (what he really should have been talking about) has doubled since 2000. Of this 100% increase, 30% can be accounted for by inflation (according to the Bureau of Labor Statistics), and the other ~70% (~5% annual growth) remains to be accounted for. If I had to bet, I would wager that new (and improved) drugs displaced cheaper ones and that they have been added in to cocktails, increasing net cost (and benefits) to patients.

I (a former Merck employee and current employee of another company on the list) am very critical of much that Merck does, but not their HIV drug pricing. Merck has brought genuine innovation (i.e., Isentress) to this therapeutic area and been criticized for pricing at the same level as more iterative advances of other companies. It's not their fault that CA can't balance their books.

condor said...

I do hear you, Anon. --

I think the central point we all are writing about is that the problem here is much wider than California, or any other single state budget. This will always be a tough question -- even in a booming economy: "What price is fair?"

I also think the overall pricing issue is more nuanced than you make it out to be, with all due respect.

It is certainly true that Isentress is a wonderful, life-advancing drug. It is also true that a pardox exists for any truly life-saving advance like it:

Should there be an implied moral obligation -- to get it to as many patients, as cheaply as humanly possible -- to alleviate suffering, or should it be perfectly moral to fully-load the cost (and thus place Isentress out of reach for about 95 percent of the US market -- available only to the very-wealthy, or holders of true "Cadillac" health insurance plans)?

I do not profess to have an answer, here -- but it seems a little trite to simply blame the problem on California's budget woes. Last time I checked, more than 29 states were running whopping deficits in similar programs.

I think the issue is one of resource allocation -- and these are very precious resources.

All of that said, I do understand your general argument (and it is not without some appeal) -- I just come out a little bit beyond the balance point you've picked -- on the side of making the treatment a nearly non-profit endeavor, now that Merck has enjoyed almost 5 years of extreme cream-skimming pricing (at $17,000 to $19,000 per year per patient).

Namaste, and do stop back!

Anonymous said...


Your point is valid, there is a moral obligation. Further, there is no economic incentive to the contrary if indeed the proposed price would prohibit access, a fact that underlies the current prevalent practice of linking drug prices to a country's standard of living. In fact, though, this is not a question of access vs non-access. Somebody is going to pay to get HIV patients in CA access to their meds, and it is really a conversation about who bears how much of the financial burden. Clearly the state of CA feels that it bears a big part of the moral obligation, and they are trying to guilt trip Pharma into taking on some of the burden that they currently bear to help them balance their books.

I will not defend the pricing practices of Pharma in general, but I have been smoldering for some time now about the specific criticisms surrounding Isentress, and MRK's temerity of pricing this game-changing new drug at the same rates as the many available protease inhibitors. What is the fair price of innovation? In this indication, especially, it seems to be taken for granted. In case you're wondering, I didn't work on Isentress, but I have friend who did, and I know how much work went into this and the other failed integrase inhibitors before it. When it launched I was truly proud of their accomplishment.

When there are hungry, we feed them out of moral obligation. I'd point out, though, that we pay the farmer fair market price for that food, even though it is for the hungry who cannot pay. Not to speak of farm subsidies. Is there a parallel here? What is the moral distinction between farmers and Pharma in this context?

Hey, I know I'm a big, heartless Republican with more captitalism than compassion, but as a pharmaceutical researcher I am continually offended at how the public maligns us and takes us for granted. We are too slow to cure X, Y, or Z, but we charge too much for the current standard of care whose profits bankroll our R&D. I see the R&D budget cuts in today's environment, and it's an absolute shame how much worthwhile stuff we aren't doing that we would be if we only had the money to do so.

Anonymous said...

On an entirely other subject, I am eagerly following this site for news of Remicade, etc. I find this site an excellent source of analysis, and recommended it to others. I suspect you'll have another good Remicade article soon. Or one about layoffs.

Condor said...

I am reliably informed that there will be no news today on Remicade/Simponi -- so there likely will be no new articles in the next few days on the topic -- I will post if I do hear something. Anything, Anything, that is definitive, that is. . . .


PS: I do hear the countervailing arguments above -- I think these are difficult lines to draw. And face it -- they likely mean the difference between several more years of very healthy life v. a constant, debilitating battle with opportunistic infections.

The stakes could scarcely be any higher.

Namaste, as well -- and thanks for the very-civil dialogue!