The 20 year clock begins to tick when the patent application is filed so, yes, the testing process eats up some time.  There are numerous ways of extending the 20 year limitation, however.  Here is an interesting article about it:  http://thinkpatient.com/pharmaceutical-patent-extension-strategies/

Interestingly, the patent laws were supposed to have been designed to allow pharma to recoup development investments.  Gilead's Sovaldi profits for the first 2 quarters were around 6 billion.  That is before the real money maker (the all oral S/L combo) has even been FDA approved.  Recouping development investment quickly becomes a non issue when the profits are this astronomical.  

just for clarity, while the 20 years is technically correct, Patent protection in the United States gives inventors the exclusive right to sell an invention for up to 20 years before others may copy and sell it. 

For pharmaceuticals, the effective patent life is actually closer to 11 or 12 years since federal law requires a company to test its product for safety and efficacy and secure regulatory approval before marketing it, a process that can take years.

I had no idea that a pharmaceutical patent lasts for 20 years. Indeed HCV could probably be eradicated in 5 years or so if the new drugs were available to all. 

Thom wrote:

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If a pharmaceutical company can't make a profit, they would have no incentive to develop new drugs unfortunately. After 7 years or whatever it is, other companies can make generic equivalents and the price will come way down.

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A pharmaceutical patent lasts for 20 years, not 7, and it can be extended.  Pharma spends very little on researching and developing new drugs.  For every dollar it spends on R&D it spends 19 on advertising and promoting.  Pharma spends billions more each year in litigation protecting their empires.  All of these costs are passed onto the consumer/patient via increased pharma, insurance, and healthcare costs.

Greed (as opposed to reasonable profits) is a motivator but it is an ineffective motivator for genuinely creative endeavors.  Greed is also a hindrance to humanitarian efforts which is what healthcare can and should be about.

Gatorman:  Excellent analysis.  Eventually may not be soon enough is right and the annual costs will also include the costs of caring for people who progress to cirrhosis, and acquire extrahepatic conditions, either while they are awaiting tx or while they are awaiting  RETREATMENT.  The retreatment costs are going to be high and could be minimized if we put patients needs above pharma's greed.

We already have quasi governmental intervention in Hepatitis C healthcare to the extent that liver transplants are regulated. In the U.S., this is accomplished by UNOS,  an agency created by congress to allocate organs. There are similar organizations in Europe and Asia that have the same purpose. UNOS takes a scarce resource (livers in our case) and allocates them primarily, but not exclusively based on medical need. Financial means, inability to comply with after care (abstaining from alcohol) are some of the exclusionary factors regarding allocation decisions. Liver transplants are not a "cure" for Hep C, have a high fixed marginal cost (unless you get transplant surgeons to donate their services), and have a very limited supply of product (livers).

Along comes Sovaldi and we now have a Tx option that potentially saves many of us from contemplating a liver transplant (or die waiting) at some point in the future. Insurance companies have so far treated and approved (allocated) Sovaldi similar to UNOS. The problem is they are using the wrong paradigm, Sovaldi is not a liver. It is not in and of itself a scarce resource. The marginal cost of increasing supply is small per unit, so it does not need to be allocated. Demand and competition can and will lower price eventually. Unfortunately, eventually may not be soon enough for many who are desperate for Tx.

With liver transplants in the U.S. averaging 6,000 per year, the annual cost amounts to only $400,000,000, just a few F 35 fighter jets. The number can't significantly increase because of a limited supply and more importantly, transplants do not solve or address the Hep C problem. If you consider the possibility of 3 million needing treatment in the U.S. at $150,000 each, then the number goes to $450,000,000,000 (billion), which is more than a few fighter jets. With a potential demand of millions of people and hundreds of billions of dollars, this number cannot be ignored politically in the long run, even though we have to some degree done that with AIDS. Even in a rich country like the U.S., this cost is prohibitive unless you eliminate either entitlements or the Pentagon, which of course will never happen. The paradigm will change because it has to, either by competition, government regulation or a hybrid of both. 

If a pharmaceutical company can't make a profit, they would have no incentive to develop new drugs unfortunately. After 7 years or whatever it is, other companies can make generic equivalents and the price will come way down.

I am fortunate enough to have a health insurance plan that covers my treatment, but I can well understand how people who need this treatment but are not able to receive it because of the cost or lack of  availability feel about the situation.

Lee,

Sure, I understand what you're saying but there should be limits to some things, like the right to endless profits over the right to life. Maybe, just maybe, the greediest among us need to control their quest for limitless wealth using the lives of the less fortunate ($) to achieve it. I don't want more government intervention in my healthcare, they've already proven themselves to be grossly inept at trying to make it "better". Less regulation and more competition is a better idea IMO. When the government gives corporate leaders free will to do whatever they want, to charge whatever they want, without competition (e.g.,endless patent protections) they will continue to limit access to those in need of their products or services. So you're right that "life isn't fair", but as long as we as a society condone the continued "unfairness", we'll likely be dealing with these issues forever. There must be a clever analogy somewhere to describe this, but  I've discovered that analogies are similar to the solutions being offered by government and the greedy among us, it's just talk without a solution. Good discussion!

Tig

Tig,

re; Only when corporate CEO's concentrate their goals on the need and compassionate care of these products instead of their greed and profits, will the world's health picture excel. Just my .02 cents...

My belief is that only a risk/reward system will produce consistent ground-breaking developments in science.  Ordinary people (incl some retirees like myself, unions, etc) invest in big Pharmas to provide income for retirement.  Big Pharma invests and hopefully returns that with dividends/rising stock price . I.E.; without the reward, why would they take the risk?   If they really only worked for the compassionate care of patients, they would simply give away the drug so that everyone in third world countries could afford it....or maybe charge 1$ for each pill which would still be too much in Haiti, etc.   There needs to be a balance and maybe 1000$ is too much but too little and all of the reward is gone along with the life saving medicines.

As I often taught my boys, 'Life is not fair'.....easy for me to state because I am getting the drug!   I wish a benevolent government could step in and make everything fair but I have never seen one work yet - read or watch the latest movie 'Atlas Shrugged' for a novelist view of that system.   The best capitalistic systems have competition that reduces prices quickly - we may have that here pretty soon - though I hope it is not with a stolen patent.

love the debate.....

Darkstar,

I agree, but the the issue of affordability remains. Yes, using your figures, $150K vs. $600K, the difference of $450K is a substantial savings. But, the cost savings from avoidance of transplantation is limited to that sub group (and others) and is entirely limited to those able to afford it. I would guess the number of individuals that can actually pay for either treatment out of pocket, is woefully small. So those costs ultimately are covered by either the insurance companies, a cost assistance program if you qualify (e.g., Gileads coupon system), or the tax payer. The benefit to society is obviously great, but at what cost overall? Gilead was in league with others when they pulled out of the cooperative venture, and dumped billions of dollars, by choice, to corner the market. Read as greed. It was a choice and that's fine, as Malcolm stated, "as long as you can afford it". But now there are additional sub groups in need of and just as deserving of the cure as anyone that will never be considered for the treatment due to the costs involved. The meds cost $1000/day, but the care and testing must also be factored into the overall cost. All of these constant additions simply compound the expense and further separate the haves and have nots. In the end, the outrageous costs limit the actual availability to the sub groups that can afford it instead of those that need and equally deserve it. Even Gilead is now working on fast tracking their own generic, which is said be $2500 per 12 week course of treatment. Now that's affordable, assuming they do fast track it. I believe the only reason is a financial one, because they're already in a patent infringement battle with China and India over a claimed $250 generic substitute! Only when corporate CEO's concentrate their goals on the need and compassionate care of these products instead of their greed and profits, will the world's health picture excel. Just my .02 cents...

I guess I see this from a bit of a different position.  If the cost of treatment is 150K then we must compare it to the likely transplant that would occur without it.  Cost of transplant about 600K.  Hmmm, 150K vs 600K.

Hey Lee

With Sovaldi being $1000 per pill and Gilead Science paying $11,000,000,000 (11 Billion) for the company that created it (Pharmasset). Gilead will have to sell 11,000,000 (11 Million) pills to to break even on the cost of acquisition or about 131,000 patients that will take a 12 week once daily dose to cover to cost, not counting the cost to bring to market via drug trials and other expenses. Lets approximate that Gilead had 1000 people enrolled in their clinical trials at a cost of $50,000 per subject thats another $50,000,000 (50 Million) or another 595 patients to cover that expense.

Of course this does not take into account difference between wholesale (Gileads cost to pharmacy) and what the pharmacy charges ($1,000).

Well since world wide they estimate roughly over 50 million people are infected with HCV you can see the possible pay back could be enormous. What I found interesting is the person or group of executives in Gilead Sciences that had the balls to predict that Sofosbuvir / GS7779 / Solvadi would be as effective on the virus and top in its class of DAA's with so many other players in the market, 11 Billion is a big number on one drug discovery.

The biggest unknown is, will the other DAA,s that are coming out degrade the price or will they go for the big bucks too. I guess that none of the other drug companies don't have as much invested as Gilead does so maybe they can come out with a much lower initial price. Its a lot about how they factor how much of the market they will capture, all their bean counters will have a lot to say about that.

You may find some of my figures could be wrong, as I am doing most of this by memory and its late at night before bed so please forgive me.

matt  

Hi Lee,

We LOVE discussing the cost of the new DAA's.  It's a disgrace and a sad reflection of the greed of PharmaCo's.  Forget Gilead for a while- how do companies like Janssen justify $800/pill for Olysio, at best a second-rate antiprotease?  Hopefully companies like Merck will put a reasonable price on their new drugs, so there's some hope of new treatments reaching countries outside the USA.

Back to Gilead. Only the shareholders paid for the acquisition and testing of Sovaldi.  Now they are being rewarded.  'We are committed to improving health and well-being around the world............'. Sure, if you can afford it.

While most would argue that 1000$ per pill SEEMS outrageous, they might not have all of the facts at hand to quickly set the 'fair' price.  Most drugs are being developed in the US under the capitalistic system that seems to provide a fertile research ground but a costly regulatory one.   A few richer countries pay retail (and thus the development/mktg costs) for the drug and the others a steep discount but at a cost - it comes later.  Remember that the base research cost for this drug was the 11B$; that is the sum Gilead paid for the company - Sovaldi is the only drug out of that purchase so far.   We would need to do a comparison of all of the treatments to determine the ROI - I know, this seems to take the patient out of it but shouldn't if done properly.  What is the value you put on efficacy?   In my case, other treatments kill my transplanted kidney and will result in the need for a double transplant in the end - HepC treatment is cheaper but the end result is a lot more expensive.  What is the cost of missed work due to the side effects of other treatments?   What about the number of people who are not getting treatments because they can't handle them.   I don't like the high prices either and enjoy this debate with an open mind.  If we had some example of countries with a higher (socialistic) government control on medicine developing a lot of groundbreaking treatments, then I might be more open to gov't control.  Having lived 62 years, I am not convinced that any government is going to reduce my treatment costs effectively.

In my frequent travels to Japan, I was always amused how much they relied on GPS (Global positioning Satellite) - yet they never paid a dime to the US for the development of it.  and....Most countries will never pay much for the development of Sovaldi and maybe that works?

Moderators - if this is unacceptable content, erase quickly and I will understand.   We should mostly be focused on helping each other deal with this crazy disease and eradicating it - however, the entry of Sovaldi (and some to come including one that Gilead is working on) may mke the cost a prime area of discussion.