Debunking a BOGUS Viral Liberal Meme on Healthcare Costs

Blog Post - Debunking a BOGUS Viral Liberal Meme on Healthcare Costs

Note: This post was authored by We Are Capitalists.

The top half of this claim is fairly accurate, in that India DOES have a treatment for Hepatitis C selling for around $900 and the same treatment in the U.S. is around $84,000. What's missing, however, is some much needed context.

To start, this isn't necessarily a case of "evil U.S. corporation" vs "benevolent Indian corporation." Rather, the source of this treatment, whether in India or the U.S., is actually the same pharmaceutical firm; Gilead.

 

Since the discovery of the Hepatitis C virus in 1989, effectively treating it has been a challenge. For years, the only available treatment options were ineffective for many patients and often difficult to tolerate. [a] Initial treatment regimens involved up to a year of weekly Interferon injections and ribavirin tablets, which can cause side effects such as depression, nausea, severe reductions in certain blood cells and flu-like symptoms. [b] These often difficult-to-tolerate treatment regimens, combined with low cure rates, caused many patients to stop treatment before it was completed.

[c] Interferon, for instance, only had a cure-rate of 20%. [d] Luckily, by 2014, Gilead developed and patented a new "miracle" drug which cured Hepatitis C 90-95% of the time, in a few short months, absent any notable side effects.[d] Also in September 2014, Gilead announced licensing agreements with seven Indian based generic pharmaceutical manufacturers to expand access to their hepatitis C medicines in 91 developing countries, representing more than half of the global hepatitis C-infected population.

[e] THIS is the source of that cheap version of the drug. It was arguably an act of charity, as the firm focused on earning its profits from U.S. and European consumers who generally can afford to pay more than 3rd world countries while also allowing generic versions in impoverished nations to be gifted away for a fraction of the price.

It was also thanks in large part to a government waiver by the Indian government. (Essentially, an agreement for the government to get out of the way.) Several patient groups, including International Treatment Preparedness Coalition and Doctors Without Borders, had been petitioning the health ministry and the Drug Controller General of India for a clinical trial waiver for these drugs. [f] Over a dozen patient groups and access-to-medicine activists from Indonesia, Thailand, Malaysia, Nepal and Vietnam had also sent similar appeals. [f] Luckily, the waiver regarding local clinical trials was granted which - combined with Gilead's efforts - is why this new treatment made it to market so quickly and cheaply in India. (A notable achievement, since according to the World Health Organization, about 12 million people are infected with Hepatitis C in India alone.) [f]

Now does that mean the price being requested of U.S. citizens isn't high? No, it certainly is high. But here are a few things to keep in mind regarding that price:

- Gilead points out that its medicine is cost effective, over the long run, since it quickly cures the majority of its patients with little need for additional care, thereby lessening the frequency of healthcare visits and hospitalizations, and lowering the need for supplemental medications that manage side effects and complications. [e] 

- Gilead also claims that the majority of commercially insured patients will be able to access its treatments with a simple $5 co-pay per month. [e] (A privilege people in 3rd world nations generally don't have.) In addition, for eligible patients with no other insurance options, their Support Path Patient Assistance Program will provide the treatment at no charge. [e]

- Even those on low-quality insurance plans, such as ones offered as part of the affordable care act, only have an out of pocket expense of around $6,000 for the entire treatment. [f] When you stop to realize that this medication literally saves your life - with no side effects - in about 12 weeks, $6,000 for a U.S. citizen isn't that bad. Again, it saves your LIFE. 

- Let's also keep in mind the severe disparity in incomes between India and the U.S. In 2013, for instance, the annual MEDIAN per capita income stood at $616 for India [g] and the AVERAGE per capita income was still only about $1,125. [h] [i] Comparable U.S. figures are $30,518 a year for an individual [j] or $54,462 a year for the median household. [k] Therefore, our financial burden, whether it be a $5 co-pay or a $6,000 deductible, is considerably lower than the one an impoverished Indian citizen living on $616 a year endures.

- Lastly, understand that the significant price disparity in the U.S. is only temporary. Exclusivity patents for this new drug mostly expire in 2018 and the remaining patents expire between 2028-2030. So, worst case scenario, the price will only remain high in the U.S. for about 14 years, at which point any competing firm can release a generic version for a fraction of the price. [L] 

- Also keep in mind costs Gilead had to endure. The treatment was originally under development by a firm named Pharmasset, which Gilead acquired for $11.2 billion in 2012, as it decided to gamble that this promising new drug would offer a solid return on investment. The acquisition was originally not popular on Wall Street, which sharply bid down Gilead shares. [m] Because of this risk, many would argue that Gilead has a right to reclaim its acquisition and development costs, as well as to be the only domestic firm allowed to profit from its new drug (temporarily), before other firms (who didn't have to take the same risks on development/acquisition costs) simply replicate it. Whether you agree with this justification or not, recall that it IS temporary, the treatment IS superior to what preceded it, Gilead DID grant licensing rights to generic firms in impoverished nations, and had their not been an opportunity to get rich, perhaps Gilead wouldn't have developed the drug in the first place. (And THAT would have left millions of lives at risk)

Conclusion:

Perhaps people should keep in mind that - if investors did NOT have the opportunity to get rich off of high priced drugs - life saving drugs wouldn't be developed as frequently. As the Senate Finance Committee summed up when questioning why Gilead could set such a high price: "Sovaldi and Harvoni (the technical terms for these drugs) drove almost all other hepatitis C drugs out of the market after 2013." [m] It succeeded at doing so for a reason. It was THAT preferential to patients and doctors.

----------------------

Sources:

[a]

Gaetano JN. Bene t-risk assessment of new and emerging treatments for hepatitis C. Drug Healthc Patient Saf. 2014;6:37-45.

[b]

Product label of PEGASYS, peginterferon alfa-2a.

[c]

LaFleur J et al. High rates of early treatment discontinuation in hepatitis C-infected US veterans. BMC Res Notes, 2014.

[d]

http://www.everydayhealth.com/news/pros-cons-new-hepatitis-treatments-patients/

[e]

https://www.gilead.com/~/media/files/pdfs/policy-perspectives/expanding%20access%20to%20hcv%20treatments%20102814.pdf?la=en

[f]

http://www.alternet.org/personal-health/84000-hep-c-drug-only-1500

[g]

http://wap.business-standard.com/article/economy-policy/india-s-median-per-capita-income-lowest-among-brics-gallup-113121600968_1.html

[h]

http://articles.economictimes.indiatimes.com/2014-02-07/news/47126380_1_2004-05-prices-lakh-crore-capita-income

[i]

Converted from; http://www.xe.com/currencyconverter/convert/?Amount=74%2C920&From=INR&To=USD

[j]

https://www.census.gov/hhes/www/income/data/historical/people/2014/p01AR.xls

[k]

http://www.davemanuel.com/median-household-income.php

[L]

http://www.drugs.com/availability/generic-harvoni.html

[m]

http://www.latimes.com/business/hiltzik/la-fi-mh-gilead-harmed-patients-20151201-column.html

 

Tags: Economics

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