07 August 2014

Sovaldi Sings Iago

For those who aren't up on Shakespeare and Rossini, Iago is a bad guy. A really bad guy. Sovaldi, according to some (and a growing count, by most accounts), is the archetype of Big Pharma profiteering; taking money from the many to give to the few for little or no real value.

Sovaldi is Gilead's hep/C vaccine, more accurately anti-viral, which costs $1,000/pill or $84,000/treatment. It is claimed to offer higher cure rate, lower side effects, and shorter treatment period.

Unlike breast cancer or prostate cancer, hep/C, by and large, is a Bad Person's Disease; mostly IV drug users. A lifestyle choice. Mostly, not all. It happens that a large number of the infected are also incarcerated, which shouldn't be too surprising. Turns out prisons don't get mandated discounts. Remember those TV cop shows, where the perp turns out to be an ex-con who just can't seem to get it together on the outside, and heists a bodega in order to get back inside? Likely see more of that.
The drug's virtue, that it frequently cures a chronic and sometimes very costly disease, is not always relevant in the prison setting. Hepatitis C can take up to 30 years to turn from active infection to serious liver disease. Therefore, a costly investment in a cure for those prisoners close to their release date will offer no relief to a prison's long-term medical budget, even if it might improve the prisoner's lifetime health.

In other words, this is what happens when public health problems are shunted off to for-profit outfits. Gilead gets all the profit (they did drop more than $11 billion to buy the company which devised it, though). Taxpayers get all the costs. What would Adam Smith (the real one) say? I mean, where's the cost/benefit analysis of making life more comfortable for drug addicts? There are nearly as effective, far less costly, existing therapies. So, what is the marginal benefit? What is the marginal cost?

Here's another case where even the 1% will need Obamacare. If the insurance companies, and other right wing scolds ("$84,000 for drug addicts!!") get their way, then far fewer treatments will happen, and Gilead will, unless stopped by the Damn Gummint, raise the price further. By restricting the use of Sovaldi to those who get hep/C, but not through Bad Behavior, the unit price will have to go up in order to preserve Gilead's entitled profit. How much up? Well, according to this chart from CDC data between 5% and 15% of infections can be considered non-willful. Like that word? Very Biblical, that word. So, the innocents infected will have to pay (or some form of insurer) some multiple of $84,000 to keep Gilead in golden threads. Take away 90% of your customers, and, if you can get away with it, the remaining 10% get truly hosed.

Here's the kicker (which hasn't been stated, so far as I've seen): since 60% (more or less) of those infected are IV drug users, and Sovaldi isn't a vaccine which offers immunity to disease, but an anti-viral, we should expect that those 60% will rotate through with some frequency. Drug use: the gift that keeps on giving. Perhaps, at the end of treatment, patients get an 'S' tattoo, indicating that they've had their once-in-a-lifetime Sovaldi treatment. No second helpings.

This is the prototypical case where an army of forensic accountants could be unleashed to discover how much of Sovaldi's claimed development cost actually was spent on the ground, and how much went to SG&A. I'd love to see that number. Not going to happen.

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