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Tag: Sovaldi

A Parasite meets Wall Street

Screen Shot 2015-09-24 at 9.23.55 AMToxoplasma gondii is a parasite that causes opportunistic infection in helpless people. It may have met its match. The cost of treating Toxoplasmosis, a rare but extant infection, just shot up exponentially. Drug-resistant strain, you ask? Have physicians in Infectious Disease gone mercenary, you wonder? No. A change in ownership.

Daraprim (pyrimethamine) is a nifty drug which kills parasites. It’s been around for eons. I still recall its name from my medical school pharmacology exam. The price of Daraprim, whose production barely costs a dollar, may rise from $13.50 a pill to $750 a pill, after the rights to distribute the drug were acquired by Turing Pharmaceuticals.

Why? The answer is best told by Michael Shkreli, the CEO of Turing, and former hedge fund manager. The reason why Shkreli has acquired a generic drug lying in a forgotten backwater, and raised the price of a magnitude more suited to the hyperinflation of the Weimar Republic, is to make profits. Lots of profit. If this answer seems inane, ask yourself why a former hedge fund manager would be interested in a rare disease of devastating consequences. Penitence is the wrong answer.

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Writing the Value-Based Contract

sovaldi sovaldi

The kiss in the song from classic movie Casablanca is, at its essence, the seal of approval on a relationship.  The kiss is meant to symbolize shared reward (love, potentially) and risk (two souls who share a common set of values but now have new lives) built with other people. The recognizable phrase provides a frame for distilling the rewards (opportunities) and risks in true health care innovation.

Innovative health care solutions, such as new value-based benefit designs or emerging treatment for complex chronic diseases, often deliver tremendous value, but they take time (usually 2-3 years), do not deliver consistent benefits across populations (based upon severity of disease) or reduce total costs consistently (based on geographic influences, for example). Generics are often described as an equal substitute for branded drugs, but this is not always the case. Commercials advertise drugs that purport to make quality of life better (the contract for care), but then the rapid-fire “potential adverse effects” statement overtakes the “superiority message,” in effect reducing the value of the contract.

So when Gilead launched a new drug, Sovaldi, that promised a cure for Hepatitis C (cure = contractual promise, or “kiss”), the market place was excited. Then the spell was broken as obvious risk, the US$84,000 price tag, was revealed.

Gilead has a huge opportunity here.  It can become the true innovator that it claims to be.  It can be the value-driven company that calls for aligning the risks and rewards so that all the parties involved achieve reasonable outcomes.

Curing the highly infectious HepC is a lofty goal for care innovation.  Gilead’s new drug purports to cure HepC within 12 weeks (for certain patients) at the cost of $1000/per day in the US.  The FDA approved the drug and it launched in January 2014. CMS agreed to fund it for Medicare patients with the right profile, which tends to open the door for legitimacy to coverage in the commercial marketplace.

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