17 August 2008

Market madness

If you want to sell your house and you think it is worth £500,000 when really it is only worth £400,000 nobody would buy it. If you thought it was worth £300,000 then the estate agent would put you right and you would sell it for £400,000. Prices are determined by what the market will bear.

If you are selling a cancer drug it is the same. You don't charge what it costs to develop the drug. You charge what the market is prepared to pay. You make as much profit as you possibly can. If the market is not prepared to pay you must reduce the price or fail to sell the drug. It is as simple as that.

If you are very greedy for profit and you set your price too high then, like the house seller, you will fail to find a buyer. It is as simple as that.

If you are trying to sell the drug in the UK you know the rules before you start. If you cannot recover your costs of development because the drug is actually not going to be cost-effective enough to meet the NICE requirement then don't develop the drug. There is no point in whipping up interest and incurring enormous marketing costs to peddle a drug that is going to be too expensive for NICE. It is as simple as that.

Why don't the drug companies get this message? And why do oncologists fall for their blandishments and play into their hands? Or is it not as simple as that?

Mike Rawlins now chairman of NICE but known to Dr Grumble from a previous senior role has been speaking out on this issue. You can read his views here. Is he cut-throat and uncaring or pragmatic and persuasive? Or is it not as simple as that?


Jobbing Doctor said...

Grumble, two of your posts are coming up on Google Reader, but not on the blog.

Is there an IT problem, or is it (because you are chummying up to Gordon) the fault of MI5?

I think we should be told!

Dr Grumble said...

Interesting but not sinister. I hit the publish button by mistake on two posts both giving advice to Gordon.

Now that Gordon is reading the blog Mrs Grumble has, for the first time, shown an interest and started meddling. This was distracting. She has become very particular about just how certain things will be phrased.

She seems to really believe that Gordon will read the blog! Some genuine readers of Dr G (Mrs Grumble does not read it at all) have long thought that the blog is read by those with power. Given the numbers that read it and their location in the world I am beginning to genuinely think that there might be more to this blogging than just having a moan.

Anyway I decided that Gordon would be too busy on his holidays to read more than one post a day from Dr G so the Grumble advice to the prime minister will be released in bite-sized chunks daily over the next 4 days. It seems from what you say that those using Reader have got advanced copies even though I took them offline within a minute.

I was actually trying to use the system that allows you to schedule the publication date and time. It's easy when you know how but I hit the wrong button twice because I have never done this before. In fact it is the instantaneousness of blog publication that I most like. But, as I say, for prime ministerial advice it will be different.

Dr Grumble said...

Ah yes. You have advanced copies. I can see them myself.

OK. This is silly. I expect most of the key people out there use Reader so I will publish these two and hope that Gordon has time to read them when he gets back from church.

David Gerard said...

Of course they can't give away expensive cancer drugs, there's too much demand for free NHS Viagra. My take: http://notnews.today.com/2008/08/18/drug-firms-deny-pricing-for-profit/

Anonymous said...

Roche said last week it will consider withdrawing from other evaluations rather than submit products only for them to be rejected by Nice as too expensive.