Thanks Mike,

Yeah, its a crazy world. Take a holiday and get cured into the bargain. Probably not good for global warming if everyone has to fly to Australia or Bangladesh, or take a bus to Canada to get treated… But that’s better than filling the pockets of Big Pharma,

Patents are important to protect IP, the problem is they produce a monopoly power that is open to abuse.

The world at large needs a mechanism to bring the pendulum back towards the centre.

To swing it all the way from monopoly to “ignore the patent” would be just as problematic as leaving it where it is.

The bottom line is that Sofosbuvir cost $375 million to develop. That’s a lot of cash, and a lot of risk. The Pharmasset investors got a great 30 x return, Gilead have got a great (almost risk free) 3 x return in under 3 years. Everyone who took a risk has been paid back in spades and now it’s time to provision the world with this cure, and for the next Pharmasset to develop the next great antibiotic.

Big Pharma has gotten fat and lazy – consider statins – we have 9 different ones – that’s one great new idea and 8 “me too” clones. Almost all the me to clone money could have been better spent on new ideas.

We need more innovation and less low risk sequels.

To make that happen we need to incentivise it, and the best way to do that is to adopt drug purchase/subsidy policies that look like “we need 2 good solutions to this problem” – who’s offering the best prices? New Zealand do exactly that and enjoy medication prices 1/8 what Australia pays and very similar health outcomes.

Australia is idiotic in this regard – we do not need all the statins to be subsidised and doing so removes price competition. It’s about time we got a clue and put our tax dollars to better use incentivising new blockbusters, not yet another sequel.

One quibble on Dr. Freeman’s post …. not three years …. Two.

The FDA approved Sovaldi (sofosbuvir) on Dec 6, 2013

For those in Australia through EU time zones, the two year anniversary date is … tomorrow.

EU approval was Jan 17, 2014 and approval in Japan was not until Mar 26, 2015.

Harvoni approval dates were:
US … Nov 12, 2014
EU … Nov 18, 2014
Japan … July 3, 2015

We should throw an online SCREW GILEAD party!

My, how time flies.

Hi Kevin,

Gilead bought Pharmasset on Nov 21 2011, then we have the various Phase 3 trials over 2012/13

In my defence I did say UNDER 3 years, which is also wrong because it has been just over 4 years since the purchase and just over 2 years since Gilead got a licence to start printing money.

How about we call it making a motza a minute?

With nearly $30 billion in over 2 years it’s around $40 million a day so Pharmasset’s original $324 million R&D investment is being returned every 8 days.

Okay Doc, I see your point … 4 years since the investment/purchase.
______________

To everybody … Again I’ll highlight that it took them only 15 days to decide to pursue, negotiate a price, and complete papers …. from Dr. Gane’s presentation at “The Liver Meeting”, or AASLD 2011, in San Francisco, to the completion of sale of Pharmasset to Gilead for $11.1 billion …. that’s gotta be some kinda record.

http://www.ft.com/cms/s/2/542ad524-8b77-11e2-b1a4-00144feabdc0.html#axzz3lD22Lvzo

There is no way this was perceived as a high risk transaction. They saw it as a sure thing … a “cash cow” in marketing terminology. Their idea that they should be getting Venture Capital style returns is ludicrous.

On the other hand, Pharmasset was in fact funded by Venture Capitalists such that it appears Schinazi only held barely over 4% of his own company. Those people did deserve a good return. (Whatever that may mean.) (I’m holding out on my opinion of Schinazi’s relationship with the VA etc. until relevant questions are answered.)

The typical human mind is such that most people don’t mentally grasp big numbers. When they hear $11.1 billion what registers is “really big number” and when they hear $3.6 trillion what registers is “really big number.” Politicians take advantage of this fact to appear like they’re dealing with problems when in fact they’re not.

But I’m going to crunch some numbers here to show why I’m not upset by Pharmasset’s sale price and its investors’ profits while I’m appalled at Gileads prices.

First, it is a known fact that the western world and Japan carry the weight of drug development costs for the rest of the world. In the US, with Medicare/medicaid prohibited from negotiating prices, and insurance companies forbidden to source out of country, the US is the primary cost bearer of Pharmaceutical Company profit taking. Japan with its aging population is likely a distant second with the EU as a single entity coming in third. So let’s look at some numbers to see what happens when you spread that $11.1 billion cost around.

$11.1 billion / various HCV Populations

US HCV population ~5.37 million or $2067/patient
This number assumes that the US carries the entire cost of the Pharmasset purchase alone.
As a US citizen I could actually accept that.

If cost is carried by the primary Western World + Japan, S Korea, Singapore * … HCV population ~10.8 million … $1028/patient

If cost is carried by the “developed world minus China” (Vororo’s number above) … HCV population ~43 million … $258/patient

If cost is carried by the whole world …. HCV population ~160 million … $69.39/patient

These numbers really aren’t very big and bear no relationship to Gilead’s price tags. Again, Pharmasset’s profits aren’t remotely the problem.
______________________
* Australia, Austria, Belgium, Canada, Finland, France, Germany, Ireland, Italy, Japan, New Zealand, Norway, Portugal, Singapore, S. Korea, Spain, Sweden, Switzerland, The Netherlands, USA, UK.
Oops, I forgot Denmark …. oh well, I’m not doing it over …. you get the point.

Great point K. Most people have no clue what a trillion dollars looks like. The link below helps clear one’s vision in that regard:

http://www.pagetutor.com/trillion/index.html

Basically, a $10,000 bundle of new $100 bills is 1/2 inch thick. Stack up a trillion dollars, and you have a stack 670+ miles high.

Bottom line, Gilead has made and is making a shit load of money. They are not Salks or Curies. Gilead’s ENTIRE reason for for existence is to make as much money as possible. Bottom line. Period. End if story. I want cutting edge medical research to continue to be financially rewarding, but the system needs balance.
The global average market price for a cure seems to be around $2000 (+/-) when you take Gilead’s stranglehold out of the equation. So, The price in the U.S. Is artificially high. We need, as they say on Wall Street, a market “correction”. A viable, affordable alternative will do that. We are getting close. I can feel it.
Mike

To clarify my position, I believe that inventors, IP owners, venture capitalists and pharmaceutical companies should be well rewarded for their endeavors and the risks they take. My comments about doing an Express Scripts with Sofosbuvir and circumventing patents are based purely on Gilead behaving in the same manner as Martin Shkreli did with Daraprim. Similarly my comment quoting Dr James about Pharmasett R&D cost vs days of return were driven by Gilead’s justification of their pricing as being due to high R&D costs.

I have just spent the evening with an old friend visiting our shores from Scotland for the first time in 5 years. So I explained to him that I had Hep C and we had a discussion about it. What amazed me was that a well educated, travelled and read 60 year old who had just retired from running his own very successful business had very little idea about the subject. When I mentioned that there were about 180 million chronic sufferers he looked thoughtful then said “No….that would mean more that one in 50 worldwide?” The implication being that I had my figures wrong……after all this disease was a problem of a few young junkies? Oh, and me of course! Having known me 25 odd years he was a little surprised. Therein lies a lot of the problem, we live with this virus and know about it, most don’t.

To the current discussion I would like to add:
– the venture capitalists took big risks and put up early monies for Pharmasett to set up – they deserve a good return.
– Schinazi had the vision to set up Pharmasett – he deserved a good return. (My less than flattering comments about him in the other thread relate to his attitude/ethics as evidenced by his ‘only working for VA 7/8 of the time’ & “I’m sorry you’re taking it personally” comments.)
– Pharmasett was publicly listed in 2007, four years prior to Gilead purchase. Neither Schinazi or VCs were majority shareholders or had a lot of control from then on.
– Gilead took 15 days after the announcement about what became Sofosbuvir to determine they would pay almost double market value for shares. (Hard for a shareholder to refuse a gold handshake offer like that)

WTF happened?

I believe someone very astute but totally ruthless at Gilead had the following brainwave:

– Sofosbuvir is a major breakthrough in the treatment of Hep C – a game changer!
– there is a worldwide market of massive proportions.
– said market is reluctant to discuss/protest publicly because of how they caught it or at least the perception presented.
– it is not a ‘messy’ disease with deaths in the streets or hideous disfigurements that will generate bad publicity about drug access.
– it usually doesn’t manifest strongly until later in life when the chronically infected are likely to have capital behind them to pay for treatment.
– the original major wave epidemic of the 60s/70s/80s driven by IVDs in first world and mass immunisation in developing and third world countries was ripe for picking.

Thus Gilead made a snap decision to pay what seemed like over the top price to ensure success in what everyone else saw as a risky move but they saw as a golden opportunity to milk the various markets worldwide for everything they could for as long as possible with absolutely no regard for their fellow man’s health.

They made a conscious, considered decision to do this and are the guilty party in this case and the others had very little ability to change the outcome whether they wanted to or not.

We do need checks and balances but I suspect those will have to be market driven in the form of:

– competition fuelled by the desire to get a small fraction of the inflated pie that Gilead have created, by undercutting/obsoleting Sofosbuvir. (Cue China?)
– enough bad publicity to hurt Gilead share prices (we can assist here)

Either of these scenarios may just, if we are lucky, be enough to cause anyone else to apply caution if considering a repeat performance.

G