MS = Money Sucker?

If you've read anything I've ever written, you certainly know that I'm unapologetically pro-pharma.

But even I'm having a tough time swallowing this latest development.

Biogen-Idec's Tecfidera, a new, first-line therapy for multiple sclerosis--a very bad disease by any measure, was just approved by the FDA. This is really great news for MS sufferers, who have had a number of rather poor choices to control progression of the disease.

And it seems to work.

Tecfidera reduced the number of patients who relapsed by about half over the course of a year, and by about one-third over the course of two years. The drug also reduced lesions in the brain compared to placebo, as measured by magnetic resonance imaging (MRI). All in all, pretty impressive.

But as a chemist, one thing really bothers me. The chemical name for Tecfidera is dimethyl fumarate--a very common chemical found in most organic chemistry labs. It costs almost nothing to make. Even at retail, you can buy a 100 gram bottle of the stuff from Sigma-Aldrich for $56.

Biogen-Idec's price? Fifty four thousand dollars per year for a once-daily 480 mg capusule.

The annual cost if you just drank it from the bottle (not recommended)-- $130-- a markup of more than 400-fold.

Yes, of course I'm aware that in most cases the cost of the active pharmaceutical ingredient (API) is only a small part of the overall cost of the drug. But still, a truly new drug has to be discovered (typically selected from 10,000 chemical compounds made in search for that one drug), a process that can take ten years. And the synthesis must be optimized for large scale and the drug highly purified. Of course, the much bigger costs of pre-clinical work, and very expensive clinical trials represent the bulk of the expense.

But this chemical was first synthesized well over 100 years ago, and has been tried for several autoimmune diseases since 1959. For whatever reason, this doesn't sit all that well with me.

The development expenses notwithstanding, $54,000 per year seems like an awful lot for something that was invented in the 1800s--about the same time as ether.

Pricing of new drugs is a black box. After 27 years doing research I learned almost nothing about how this is done, so my opinion on this should be taken with a grain of ignorance.

But still, there is something that bugs me about this. Fifty four thousand dollars a year for something that is cheaper to make than apple sauce simply sounds like way too much.


Emotionally, I agree with you. That price does seems high. However, there are two things to keep in mind.

First, if developing dimethyl fumarate for MS was so easy, why didn't another company do it years ago and beat Biogen-Idec to the punch?

Second, there's an old story about a key piece of equipment that broke down, completely stopping production in an entire factory. The company was losing a million dollars a day. The repairman came, looked around for a bit, replaced a small piece of equipment, and got everything working again. The factory manager was ecstatic, until he got the repairman's bill, which was for $10,000. "$10,000, that's a ripoff! You weren't even here for 20 minutes and that part couldn't have cost more than $30. How could this be $10,000?" The repairman then calmly gave the manager an itemized invoice. It said, "$25 for the replacement part. $9,975 for knowing which part to replace. $10,000 total."

I think this particular drug is a symptom of the problem, which is the whole system. It is so expensive to get a drug approved by the FDA and companies face so many potentially expensive risks that (1) there are few competitors to hold down prices and (2) companies want to be compensated for their risk, so they set high prices. Also, the freedom of insurers to cover what they think is important is somewhat restricted. And physicians and patients are isolated from the costs of therapies, due to the way health insurance usually works.

The prices of branded drugs would probably be half to 1/10th as high absent the FDA and other government regulations.

keep in touch     Follow Us on Twitter  Facebook  Facebook

Our Research

Rhetoric and Reality—The Obamacare Evaluation Project: Cost
by Paul Howard, Yevgeniy Feyman, March 2013

Warning: mysql_connect(): Unknown MySQL server host '' (2) in /home/medicalp/public_html/incs/reports_home.php on line 17
Unknown MySQL server host '' (2)


American Council on Science and Health
in the Pipeline
Reason – Peter Suderman
WSJ Health Blog
The Hill’s Healthwatch
Forbes ScienceBiz
The Apothecary
Marginal Revolution
Megan McArdle
LifeSci VC
Critical Condition
In Vivo Blog
Pharma Strategy Blog
Drug Discovery Opinion