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Comment by olefoo | Hacker News Reader

For added corruption under the American model:

AbbeVie runs what is called a co-pay assistance program where they pay the difference between your insurance coverage and your copay. So they book a sale at full-price, paying (full price - (amount covered + $5 )) and they get to deduct the money they payed to themselves as a "charitable contribution".

Which is so many flavors of shady. For a drug that costs literally pennies per dose to manufacture.

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Funny how everybody is always in favor of shadiness when it benefits the causes they like, and against other forms.

For instance, when it became clear that the tax reform threatened universities using funds "to be paid to PhD students" to their own general fund ... the protests against that on hacker news were deafening.

But yes, this is pretty shady.

Your comparison is hugely unfair. The accounting nonsense for universities "paying" themselves for a PhD student's tuition is ridiculous but it's not classified as charity.

It’s also using make-believe numbers to get more money from someone else (donors and grant givers).

But there it actually makes sense - they are in fact teaching courses to graduate students, providing them with library access, etc. If a grant wants to support an extra grad student for a professor, it has to cover that stuff and calling that stuff 'tuition' is reasonable. It's only unreasonable to call it "income" for the student, which is a fiction that's inconsequential outside of the university itself (and the alternative universe where the tax change took place).

Let's compare it to what would happen if any other organisation did this.

Say, your employer demanding access to the tools you need for your job. That desk chair ? 20$/month. Computer ? 200$. Screen ? Another 30$.

That would be just peachy wouldn't it ? Oh wait. That's illegal by law.

It's not limited to AbbVie either, I get Xolair injections for chronic hives and Genentech uses a similar program. I assumed they were making a profit from the insurance-covered portion of the cost and used the program to maximize the number of people taking the drug. That idea in itself is pretty "clever" but if they also get to call the program-covered portion a "charitable contribution" then that is really something special.

> For a drug that costs literally pennies per dose to manufacture.

Pennies per dose for a biologic?

But why does the cost increase over time (ignoring say normal inflation eg RPI) especially for a widely prescribed drug.

It’s perhaps analogous to how list prices for college tuition aren’t necessarily reflective of what people actually pay.

It’s a complex system and the price increases are used in part to negotiate with the intermediaries like PBMs.

Biologics are a special case also due to complexities in how they (and biosimilars) are regulated, manufactured, and exclusivity periods they are granted. They certainly are not a few cents a dose to make.

Not a satisfying answer, and apologies for that, but it’s difficult to traverse with anything approaching brevity.

Not the same professors salary and other costs rise with inflation a drug once developed and a production line is in place does not face the same cost increase

Drug company employee salaries and overhead also keep pace with inflation, better than academic salaries. I don’t understand your point.

A biologic production line requires extensive upkeep: it is a living product. Costs all around are higher. There are also Phase IV activities to consider.

Bottom line, all else being equal, biologics cost more than small-molecule drugs to make and distribute.

I may have been using rhetoric; but I would be surprised if the direct cost ( lab time, process control, packaging, etc. ) were more than $40/dose.

And consider that most of the research on which Humira, Embrel etc. came from was sponsored by the US Taxpayer.

I don’t have specific knowledge on Humira or its biosimilars, but $40 is more reasonable.

To be specific, Humira was developed from research by BASF Bioresearch (bought by Abbott) and a research consortium in the UK, so credit to the UK taxpayers is warranted; I’m not sure about the US side.

Nevertheless, government sponsored research largely does not cover the development of the drug, and those costs are somewhere in the hundreds of millions USD range on up.

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