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Monday, February 16, 2015

Drug Prices are Bankrupting America

Jeff Sachs:

The Drug that is Bankrupting America: America is the land of breakthrough science ... in the case of the new hepatitis C virus (HCV) cure named sofosbuvir, sold under the brand name Solvadi by the drug company Gilead Sciences. There is no question that Solvadi is a godsend - a lifesaver for millions ... around the world ... Yet Solvadi is also the poster child of a US healthcare system that is being bankrupted by greed, lobbying and indefensible policies on drug pricing.
The basic facts are these. ... Gilead set the price for a twelve-week treatment course of Solvadi at $84,000... According to researchers at Liverpool University, the actual production costs of Solvadi for the twelve-week course is in the range $68-$136. ...
The standard defense by the drug companies ... is that drug discovery is costly and their high profits reimburse the R&D costs. Here is where the story of Solvadi gets even more interesting. The total private-sector outlays on R&D were ... almost surely under $500 million, meaning that the decade-long R&D outlays were likely recouped in a few weeks of drug sales.
Here is the background. Sofosbuvir was developed under the leadership of Prof. Raymond Schinazi, a brilliant professor of biochemistry at Emory University. The US Government heavily funded Prof. Schinazi's research...
Solvadi ... shows how publicly financed science easily turns into arbitrarily large private profits paid for by taxpayers. The challenge facing the US is to adopt a rational drug pricing system that continues to spur excellent scientific breakthroughs while keeping greed in check. Big Pharma and the US public are on a collision course when they should be partners for the advancement of health.

    Posted by on Monday, February 16, 2015 at 12:20 PM in Economics, Health Care, Market Failure | Permalink  Comments (63)


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