Monday, August 16, 2010

Me-too drugs

When Provenge, a controversial prostate cancer drug, hit the market this year, the maker could demand a ransom because there was no real analogue. (Patients are given three infusions of Provenge, each costing $31,000.) In contrast, the cholesterol-lowering drug Livalo, which earned FDA approval in 2009, had to contend with well-established statins like Lipitor and Crestor. Even though the drugs work differently, they all serve the same purpose. The manufacturer had little leverage in negotiating with insurers and had to undercut its competitors on price. The cost of Livalo, at about $3.30 per dose, is 15 percent lower than Crestor.
--Brian Palmer, Slate, on why we should encourage the development of me-too drugs. Competition works in the pharmaceutical industry too.

You hear a lot about how expensive it is to bring a drug to market. All of that is true, especially for cancer drugs. It costs around $1.75 billion to develop the average cancer medicine. Only drugs for respiratory disorders, at $2 billion, can top that total. (AIDS drugs and anti-parasitics are the real bargains, at between $500 million and $700 million.) But there is no correlation whatsoever between the cost of developing an individual drug and its eventual price. Drug companies have to make a profit over the long term. Most of the chemicals that a company experiments with never make it to market. Of those that do, only 20 percent are ultimately profitable. They cover these losses—and then some—by squeezing as much money out of their few successes as possible.
--Brian Palmer on why we shouldn't just lower drug prices by fiat

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