Priceless medicine: innovation pusher or innovation killer?

Source: on November 5, 2014, policy makers of Forbes Chinese website are conducting unprecedented review on the high price of specific drugs Gilead's $84000 course of hepatitis C drug sovaldi is one of the "culprits" (or "Heroes") of this, along with kalydeco of vertex, keytruda of Merck, and a range of other six figure drugs The pharmaceutical industry responded as we expected They explained that high drug prices were necessary to fuel the fire of innovation Indeed, if there is no potential return, investors will certainly stay away However, how to answer the following questions? ——How high does the price of medicine need to be set? When will the profit seeking ingredients of high drug prices exceed the need to promote innovation and ruin the market? I think we've come this far For example, for lung cancer (or other cancers) caused by an acquired genetic abnormality called ALK (anaplastic lymphoma kinase) gene rearrangement, there are currently seven related therapeutic drugs in human trials (see chart) Alectinib of Roche is in the third phase of the trial, while ariad, tesaro, Pfizer and ignyta are all in the second phase, and four other drugs are about to enter the human trial phase These drugs are all targeted at the same carcinogenic mechanism, and the number is not very large If the lung cancer caused by ALK gene rearrangement constitutes a huge market, this may be justified, but it is not The first-line and second-line indications for the lung cancer have been dominated by Pfizer's xalkori and Novartis's zykadia, respectively Moreover, only 3% - 8% of metastatic lung cancer is caused by ALK gene mutation, which is equivalent to that only a few thousand people suffer from this disease every year in the United States If this is not a huge market, why are there so many ALK drugs? I think the reason is high drug prices Federal Medicare and most private insurers must include new cancer drugs in their prescriptions, regardless of their price, or whether there are cheaper alternatives Moreover, as the pharmaceutical industry continues to try to offer higher and higher prices, everything goes smoothly except for some sharp editorials and reports about patients' poverty caused by illness Under the circumstance that each new anticancer drug is marked with high price, pharmaceutical companies follow a path that many people have already gone through, and chase each other in the competition for profits, which makes it less attractive to carry out high-risk innovation However, high-risk innovation is still the only way to obtain new drugs to solve those unmet needs The mechanism needed for the production of such new drugs is still an assumption today You may say that this is not a matter of either or But if that's the case, then our whole discussion about why high drug prices are needed to drive innovation will fall apart Obviously, there is only so much money to invest in developing new drugs If that money is used to develop another drug to treat ALK gene rearrangement disease, then there is no money to be used to develop new drugs based on unproven ideas The same is true for the construction of research infrastructure and the recruitment of patients for these studies Some macro events show the distorting effect of high drug prices Gilead bought pharmaset at a high premium of 89% because they knew they could put an unheard of price tag on any effective anti hepatitis C drug The acquisition has brought Gilead amazing profits, which is the return we often hear from investors But wait a minute, this is not the story of sovaldi's drive to innovate anti hepatitis C drugs The story is that Gilead, a pharmaceutical company, realized what was ignored by other pharmaset bidders and Wall Street, that the price of drugs was not restricted by gravity We know that pharmaset's expected fee for a course of its anti hepatitis C drug is $36000 - only 42% of the price of Geely's sovaldi So that pricing - which is much lower - is necessary to drive innovation, not Gilead The staggering price of new drugs is now expected, and pharmaceutical companies that miss sovaldi will not miss it again next time They will mark their drugs at crazy prices, which means higher valuations Roche just bought intermune at a 40% premium in a deal worth more than $8 billion The latter developed a drug called esbrit This is an amazing drug that may benefit 100000 people suffering from idiopathic pulmonary fibrosis When the US Food and Drug Administration (FDA) approved ebriet, Roche announced that the annual cost of treatment was $94000, more than twice the price of the drug in the European market This is a simple arithmetic problem: if they can achieve full market penetration, Roche will be able to recover all its investment in one year In the same way, the possibility of labelling esbrite as a high price did not spur innovation, but encouraged Roche to have the money to buy intermune Today's investors are very happy (and I am happy for them), but how many of them were present and paid for the investment when they made the high-risk decision to develop esbrite? High drug prices may be necessary to promote innovation However, although the pharmaceutical industry claims that it is to make it possible to obtain rare fruits, the market tells us the opposite fact: high drug prices have become the fruits of the war