Gilead Profit Triples, Hepatitis C Drug Revenue Reaches $2.3B

Fox Business, April 22, 2013

Gilead Sciences Inc (GILD), which ignited a fierce debate over prescription drug prices, said its new $1,000 hepatitis C pill generated quarterly sales of $2.27 billion, helping the company’s quarterly net profit nearly triple.…


MIA In The War On Cancer: Where Are The Low-Cost Treatments?

By Jake Bernstein
ProPublica, April 23, 2014

Increasingly, Big Pharma is betting on new blockbuster cancer drugs that cost billions to develop and can be sold for thousands of dollars a dose. In 2010, each of the top 10 cancer drugs topped more than $1 billion in sales, according to Campbell Alliance, a health-care consulting firm. A decade earlier, only two of them did. Left behind are low-cost alternatives, including generics, that have shown some merit but don’t have enough profit potential for drug companies to invest in researching them.

The predominant focus of cancer drug development today is on “targeted therapies” that are both innovative and lucrative. These drugs block the growth and spread of cancer by interfering with specific molecules involved in tumor growth. Fashioning these targeted therapies involves costly molecular and genetic experimentation, but once patented the investment can translate into enormous drug company profits.


Healing Medical Product Innovation

By Steven Garber, Susan M. Gates, Emmett B. Keeler, Mary E. Vaiana, Andrew W. Mulcahy, Christopher Lau, Arthur L. Kellermann
RAND Corporation, April 22, 2014

Previous studies aimed at reining in spending on technology have focused on changing how existing medical technologies are used. But what about also encouraging the creation of technologies that could improve health and reduce spending, or that provide large-enough health benefits to warrant any extra spending? A recent RAND study focused on policies that could help change which medical products—drugs, devices, and health information technologies—get invented in the first place.

To spur inventors to create medical products that lower health care spending and promote health, policymakers need to address the perverse financial incentives that lead inventors and investors in the opposite direction. Currently, large profits are most often available from creating increasingly expensive products that boost spending, whether or not they also substantially improve health. In contrast, inventors face relatively weak incentives to create products that would help decrease spending.

The RAND research team developed ten high-priority policy options that could change the costs, rewards, and risks that inventors and investors face. We synthesized information from scientific, trade, and popular literature; conducted interviews with more than 50 national experts from a variety of fields; sought input from a panel of accomplished technical advisors; and developed illustrative case studies of eight medical products.

Ten Policy Options for Healing Medical Product Innovation

1.  Enable More Creativity in Funding Basic Science

2.  Offer Prizes for Inventions

3.  Buy Out Patents

4.  Establish a Public-Interest Investment Fund

5.  Expedite FDA Reviews and Approvals for Technologies That Decrease Spending

6.  Reform Medicare Payment Policies

7.  Reform Medicare Coverage Policies

8.  Coordinate FDA and CMS Processes

9.  Increase Demand for Technologies That Decrease Spending

10. Produce More and More Timely Technology Assessments

Because the stakes in reining in health care spending are so high, and the need to get more health benefits from the money we spend is so great, we believe all of these options should be considered—the sooner the better.

RAND Research Brief:

New technology and drug development is being driven by profits in the private sector – massive profits. Even those of us fortunate enough to not have to use the new technology are still paying for it through taxes to support government health programs and through higher premiums for private insurance plans.

As the nation with the highest health care spending it has become an imperative that we do something about this. The drive to obtain lower prices in health care will not come from the private sector since its first priority is massive profits. Change will have to come from our government.

RAND has published a Research Brief listing ten policy options for “healing medical product innovation.” The list includes some reasonable concepts and some ideas that perhaps are not so hot. What is important is that policy wonks are thinking about the problem and pushing us to do something about it. Especially important is the concept that innovation should be targeted to reducing costs when possible, not to deliberately designing products to be more expensive.

RAND’s suggestions do include a major role for the private sector, but give them too much control, in my opinion. More control should lie with government entities such as the NIH. The private sector wants better products at higher prices whereas the government should incentivize better products at lower prices. As long as the private sector would be willing to provide us with greater value, they should receive legitimate costs plus fair margins.

The benefits of medical product innovation should accrue primarily to the people, both as improvements in health technology, and as reductions in costs. It is the consumers who ultimately pay for the development costs who should be reaping most of the benefits – not Wall Street, Madison Avenue, passive investors, nor the superabundance of administrators that permeate our health care system.

The point is that we can do something about this misdirection of our funds. We need to place a priority on the ethics of health care spending – the same type of priority that would also lead to a single payer financing system – thereby creating much greater value in health care for all of us.