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From the SCIENTIST: How Much Should Gardasil Cost? Merck's Net Income for 2006 ~ $4.5 BILLION Dollars



 
 
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Old April 27th 08, 05:55 PM posted to misc.kids.health,ca.politics,misc.health.alternative,misc.headlines,talk.politics.medicine
Ilena Rose
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Default From the SCIENTIST: How Much Should Gardasil Cost? Merck's Net Income for 2006 ~ $4.5 BILLION Dollars

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http://www.the-scientist.com/article/home/53410/

A sneaky virus has infected 20 million Americans. For most, it's just
an inconvenience, causing unattractive lesions. But for some, the
infection leads to cancer, killing 250,000 people worldwide and
costing billions in medical expenses every year. The vast majority of
people who develop the cancer live in low-income countries, where it
has become the most common type of cancer in women. After years of
research, a company has released a vaccine that prevents nearly 100%
of infections by the four forms of the virus that cause most of its
problems. The question is: How much should such a life-saving vaccine
cost?


Most of you probably realize that I'm talking about Gardasil, which
Merck developed and the US Food and Drug Administration approved last
year. The vaccine targets human papillomavirus (HPV), which can cause
genital warts and, eventually, cervical cancer. Given the impact HPV
has on sexually active people worldwide, it would appear that no price
is too high ? unless it's priced out of reach of millions of women,
which it does.


At $360 for a three-dose regimen, not including administration costs,
the vaccine is incredibly expensive, especially for women in
developing countries. Insurance companies, moreover, have balked at
covering the full cost of the vaccine, some reimbursing as little as
$2 per dose. Merck suffered mightily from the safety issues associated
with Vioxx and other similar drugs, and Gardasil won't become a
blockbuster drug if it is an elective intervention. But can't Gardasil
make money for Merck without a prohibitively high price?


Merck dedicated more than 20 years to Gardasil, and a 1998 report
estimated that companies spend $250 million developing a vaccine.
Merck sold $365 million worth of the vaccine in the first quarter of
2007, and that's before some states have mandated it for all young
girls, something many are considering. To that end, Merck lobbies the
offices of governors and other legislators, arguing that Gardasil
saves regions money by reducing the long-term cost of treating
HPV-related illnesses. In short, pay now, save later.


According to Jennifer Allen, a Merck spokesperson, the company
calculated the price based on both the cost of R&D and what the
vaccine could save in HPV-related treatment costs, which she estimated
at $5 billion per year for just the four strains targeted by the
vaccine. But a Canadian report from the British Columbia Cancer Agency
that compared the cost versus savings of HPV vaccination in the
province through 2031 disagreed with Merck's calculations. This report
found that the cost of vaccination greatly outweighs the amount saved
by avoiding treatment of HPV-related disease, and an HPV vaccination
program only "breaks even" when the price of vaccination dropped to
$60 (CAN) per individual (roughly $55 US).


Does Merck really need to charge $360 per dose to earn back what
they've spent on developing it? The company estimates its net income
for 2006 at nearly $4.5 billion. If they sold Gardasil for 1/10th its
current price, assuming the number of units sold stays relatively
steady, the company would have $36.5 million in sales each quarter, or
$146 million each year, from that product alone. A few more months,
and they could recoup their development cost, and start making up for
the funds wasted on researching vaccines that didn't make it to
market.


It's hypocritical for Merck to argue to legislators that Gardasil is
an essential tool for public health, and then raise the price to a
level that most women can't afford ? especially those outside the
United States who are most hard-hit by cervical cancer. Since 1998,
Merck has spent about $48 million on lobbying, according to the Center
for Public Integrity. If the company can afford to spend huge amounts
convincing legislators the vaccine is something every woman deserves,
it can afford to take its own advice, and reduce the price.


Glenn McGee is the director of the Alden March Bioethics Institute at
Albany Medical College, where he holds the John A. Balint Endowed
Chair in Medical Ethics

 




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