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The Myth of High Drug Research Cost – Part II

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The truth is that Big Pharma simply prices drugs as high
as the market will bear:

A group of AIDS physicians called for a boycott of all Abbott Laboratories
therapies to demonstrate their disapproval of the company’s recent
price increase for its Norvir (ritonavir) HIV therapy, Reuters reported.

In December, Abbott raised the price of Norvir by 401 percent,
from $1.71 to $8.57 for 100 milligrams, generating “a never-before-seen
level of outrage” among physicians, according to Dr. Benjamin Young,
an HIV specialist at Rose Medical Center in Denver, Reuters reported. "This
is an unprecedented, unethical price increase," he added.

Abbott said in response that the price increase was long
overdue because of Norvir’s ability to enhance other therapies. [Protest
of Norvir Price Increase
2/12/2004]

And from an earlier post of mine:

Merck CEO Raymond Gilmartin, who attended
the Tufts Center event in Philadelphia, contradicted PhRMA’s assertion.
Gilmartin said there was no direct link between R&D costs and prescription
prices. "The price of medicine is not
determined by research costs," Gilmartin stated. "Instead, it
is determined by their value in preventing and treating disease."
[Tufts
Drug Study Sample Is Skewed
12/04/2001]

Here’s the
original post
with a lot more detail and a
printable version
on my site.

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About Hal

  • http://www.tude.com/ Hal Pawluk

    Not at all.

    But their bullshit is that drugprices are high because of the high cost of research.

  • http://scottpepper.blogspot.com scott pepper

    The Norvir price increase was not merely price gouging.

    Bristol-Myers Squibb, an Abbott competitor, has a new drug (Reyataz) that requires co-administration with Norvir.

    Reyataz competes directly with Abbott’s Kaletra for a large portion of the HIV market.

    By raising the price of Norvir, Abbott makes it more expensive to use its competitor’s product, hopefully driving more physicians to prescribe Kaletra instead.

    Obviously, this strategy has backfired. However, to put the price increase in terms of gouging consumers rather than to unseat a competitor is to misrepresent its intent.

  • http://www.tude.com/ Hal Pawluk

    Maybe.

    But: ” Abbott said in response that the price increase was long overdue because of Norvir’s ability to enhance other therapies”

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