One of the newer hemophilia drugs is called Hemlibra and has a list price of $450,000 a year. Yeah. I know expensive drugs. Why is it so expensive? Because "it'll save society money in the long run."
What drugs cost is often based on their so-called "value to society" and not the development and manufacturing costs. In the hemophilia community, we've seen this play out over the last half-decade. Prior to the mid-seventies the standard treatment for hemophilia was cryoprecipitate which generally had to be administered in a hospital/ER setting. (Cryoprecipitate is what you get when you freeze plasma. The plasma precipitates out into layers and one layer contains the clotting factors. That layer was then used to treat hemophilia.)
In the mid-seventies, they figured out how to freeze-dry the clotting factors. This made them stable under refrigeration and allowed for treatment in doctor's offices or homes. What to charge? Well, the cryoprecipitate was pretty cheap stuff (still is), but the hospital-related costs made treatment very expensive. The powers-that-be concluded that if it cost $5,000 to treat hemophilia in an ER/hospital setting then we should charge $4,000 per treatment for the home/doctor's office use. Society will save $1,000 per treatment. Whoo hoo! Yeah.
It didn't work that way. What happened is that small bleeds that would have been treated at home with RICE (rest, ice, compression, and elevation) were now being treated with clotting factor. Instead of one, two, or three trips a year for treatment at an ER/hospital (costing up to $15,000 in total), patients were now getting infused with clotting factor two or three times a month costing up to $12,000 a month. Doctors soon realized they could prevent most bleeds by infusing factor three times a week costing up to $12,000 a week. The cost of treating hemophilia skyrocketed and by the 1980s the average cost to treat hemophilia was over $300,000 compared to the more typical $10,000-$15,000 before the freeze-dried clotting factor came along. So much for saving society lots of cash.
These days the estimated cost to treat hemophilia is between $500,000 and $850,000 with some patients costing even more. So, for the folks behind Hemlibra charging "just" $450,000 a year makes it a bargain. "Look at all the money we'll save society!" Yeah. Been there, done that.
Now genetic therapy for hemophilia is on the horizon to cure hemophilia. The hemophilia community has funded this research for decades. What will they charge to fix our genes? The estimated cost now is between $1 million and $2 million. Why so expensive when the community paid for most of the research? Because it'll save society so much money over treating hemophilia conventionally. A single $2 million payment is so much cheaper than paying $850,000 each year!
The cost of medications typically has next to nothing to do with development costs or manufacturing costs. It's the "impact on society" that controls costs. Well, control isn't the right word as they never try to control costs. They use the "impact on society" to justify charging whatever the heck they feel like charging. The hemophilia community has seen treating hemophilia go from somewhat expensive to "Are you freaking kidding me?"
When it comes to pricing meds like heart medications, they'll argue that their new medication prevents hundreds/thousands of heart attacks a year and each heart attack would cost X amount of money, so if they charge less than X amount of money for the medication, society wins. What the medicine actually costs to develop, make, distribute, doesn't matter. It's the "impact on society" that controls the cost.
Until that whole "impact on society" narrative gets changed and the real-world cost of developing, making, and distributing the drug is used to set the price, we'll see these absurd prices.
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