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WSJ Editorial: The Medical Innovation Threat

August 20, 2014
An editorial in today's Wall Street Journal looks at the rising threat the American insurance industry’s increasingly loud attacks on Sovaldi, a revolutionary new Hepatitis C treatment pose for medical innovation and the development of new specialty drugs.

As the editors rightly note, “Sovaldi is the kind of medicine that the drug scolds claim to want—a true scientific advance with a near-perfect cure rate for Hepatitis C, the liver-destroying virus that infects one of every 100 Americans and some 150 million world-wide.”

They write:
In exchange for the staggering risk and investment to make a new drug, and the far too slow and adversarial FDA approval process, companies are granted intellectual property protection and the freedom to set their own prices as an incentive for research and development. The life of a pharma patent is now roughly a decade. After that the long-run interest in cheaper medicines is satisfied with generic copies, which now make up 86% of prescriptions filled.

Supposedly Sovaldi's maker, Gilead Sciences, has broken some Hatch-Waxman social compact by charging too much, but the critics never define the "correct" level and in any case this first-in-class cure is priced comparably to Hep C treatments with life-long toxic side effects. The critics seem to know the price of everything and the value of nothing, which in this case includes the benefit to patients and eradicating this disease in the U.S. by 2036, according to an MD Anderson Cancer Center analysis.

The editors also argue, as BIO’s Jim Greenwood has before, that drug prices are not (and cannot) be tied solely to the cost of their own individual development, given the high failure rate in drug development and limited profits even for many approved treatments.
Only two of every 10 drugs on the market ever earn back enough money to match the cost of R&D and FDA approval before patents expire. Successful drugs thus underwrite the uncertain, failure-prone, time-consuming and often wasteful and even random process of scientific invention.

Read the full piece here.