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How Much Should Gardasil Cost?

Merck could cut the price of its new vaccine by 90% and still do very well.

By | August 1, 2007

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 gmcgee@the-scientist.com

Comments

Avatar of: B. Dodge

B. Dodge

Posts: 2

August 21, 2007

Do we really need another article complaining that publicly-traded, for-profit companies charge too much for their products? Maximizing the social good is definitely not why they were established. If you believe they are denying treatment due to pricing, you have other options beyond haranguing them about morality:\n- Go to the annual stockholder's meeting with a motion for the stockholders to approve to reduce the price;\n- Get the government or a large NGO like the Gates foundation to buy and distribute the product;\n- Go into the vaccine business and compete against them with a lower-priced alternative,\n- Change the patent laws so that you can get a low-cost producer to copy their product and sell for less, or go overseas to a non-compliant country.\n\nPersonally, I'm just glad to see the pharmas actually back to working on life-saving products instead of hair-growers and erectile-disfunction treatments!
Avatar of: J Palguta

J Palguta

Posts: 1

August 21, 2007

In considering how much profit Merck is entitled to make on their investment, one should also consider the U.S. taxpayer's investment. As I understand it, two researchers at the National Cancer Institute did much of the basic research that enabled Merck to have something to sell. Those researchers are Drs. Douglas R. Lowy and John T. Schiller of NCI's CCR who also received the Dorothy P. Landon-AACR Prize for Translational Cancer Research for their work leading to the development of the human papillomavirus vaccine. (See http://www.aacr.org/home/public--media/public-policy--legislative-affairs/press-releases--articles.aspx?d=725). Dr. Lowy is chief of the Laboratory of Cellular Oncology (LCO) and Basic Research Laboratory; Dr. Schiller is a senior investigator in LCO and head of the Neoplastic Disease Section. The international prize is one of the largest awards offered to cancer researchers from a professional society of their peers. \n\nSince the U.S. government does operate for the common good, I think there is a reasonable expectation that the benefits of taxpayer funded research should be made available at a very reasonable cost to the American public.
Avatar of: Jeff

Jeff

Posts: 1

August 21, 2007

saying that "Merck suffered mightily from the safety issues associated with Vioxx and other similar drugs" isn't quite the case. I don't think Merck has suffered much at all and considering the arrogant stance they have taken, doesn't seem too concerned with those who have. There are thousands of patients out there who have been affected negatively by Vioxx, and all we hear about is poor, poor Merck. It isn't Merck I worry about. They'll do just fine, no matter WHAT they decide to do. They simply choose to take the most profitable route, despite their constant, self-serving claims that the customer comes first. Bull! This entire Gardasil issue is a transparent strategy to force the public to pay for Merck's past mistakes and misdeeds.
Avatar of: Ilena Rosenthal

Ilena Rosenthal

Posts: 1

August 21, 2007

This article made some excellent points. \n\nAnother important number not yet disclosed is the "public relations" dollars added to the lobbying budget (declared to be only $48 million dollars). \n\nPublicists (aka flacks, shills, anonymous and named) are everywhere on the internet repeating Merck's propganda almost verbatim. Usenet and blogs are filled with them.\n\nA WikiScanner search revealed official Merck computers in several countries posted around 2,000 entries on Wikipedia. And many more are freelancers.\n\nHow much of the $360 spent for this unproven drug is also paying for the untold hundreds of hours on Wikipedia and Usenet and the blogworld defending Merck and distracting from the problems emerging? \n\nMounting deaths and injuries are downplayed as mere "side effects" and "complications." The death of a young woman from a blood clot three hours after her jab, in MerckSpeak is just "coincidence."\n\nIn the United States, already seven deaths (as young as 11 and 12) have been reported. All occured soon after their Gardasil vaccination. \n\nOthers have developed a serious, painful autoimmune disorder known as Guillain-Barre Syndrome.Scores have reported potentially permanent disability. These numbers are current only as to July, 2007.\n\nHere is a list of over 2500 adverse reports made after Gardasil injections (each containing 225 mcg of aluminum adjuvant)\nhttp://tinyurl.com/2enev2\n\nThere are also marked lapses in the information about Merck's use of aluminum adjuvant in its 'placebo' that might have skewed their published results.\n\nInfo on that is here: \nhttp://www.909shot.com/PressReleases/pr62706gardasil.htm\n\nTo view the VAERS list of over 1660 "side effects" ...\n\nhttp://www.judicialwatch.org/archive/2007/GardasilVAERSReports.pdf\n\nAnd here the listing of the first 3 reported deaths ... \n\nhttp://www.judicialwatch.org/archive/2007/GardasilVAERSDeaths.pdf\n\nThere are far more unknowns than knowns about this drug, and as school begins in the next month, parents need to become more informed before submitting their youngsters as lab rats.\n\nhttp://www.BreastImplantAwareness.org/\nhttp://ilena-rosenthal.blogspot.com\n

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