The Boy Who Cried Clorox
President Trump yesterday made yet another remarkable public statement about his experiences with the Covid-19. Aside from all the usual fluff about “the China Virus” and claiming that his becoming infected with Covid was “a blessing from God,” he made two salient, newsworthy points:
1. He declared the Regeneron antibody therapy he received to be “a cure” for this deadly, highly infectious disease.
2. He said that he was going to make it free for all Americans, stating, “I want everybody to be given the same treatment as the President,” and “I want to get to you what I got, and I’m gonna make it free. You’re not going to pay for it.”
In the press, it’s the first statement that will likely generate the most news, at least initially. Many media outfits will treat it as another wild assertion by a desperate man. I expect it will be covered in the context of his previous statements that you could cure Covid-19 with bleach, hydroxychloroquine, or “very powerful light brought into the body.”
In other words, I expect a lot of serious people will take it as a joke. And that is really too bad, because he is very probably right.
As regular readers will attest, we’ve been tracking the development of monoclonal antibody therapies now for many months. They really are a whole new world, and it would not surprise me at all to discover that the Regeneron treatment — a cocktail of two separate monoclonal antibodies that each attack a separate protein spike on the virus — is, in fact, a very successful treatment for the disease. These are highly targeted medicines, and they are specifically designed to kill this exact virus.
As our friends at Centivax have been saying now for six months, this is how we get back to the new normal. If the President’s use of these therapeutics gets them to the market more quickly, that’s great. It might mean that I get to see my family before 2021.
The second statement, I’m guessing, will get less immediate play, but it’s also carrying a LOT of weight. Monoclonal antibody therapies, so far, have been among the most expensive of all medical interventions. For cancers and hematological use, they routinely got over $100,000 annually. That could be much, much lower for use in cases like Covid where you simply need to kill all the virus in the body — often, literally, in one shot — but a price range of $5000 to $10,000 a dose is not out of the realm of likely possibilities. Moreover, that price would only hold if the medicine was purchased through an insurance company. Uninsured individuals would — if standard pricing models hold — be expected to pay even more.
Drug pricing in the United States is both byzantine and gallingly opaque. Since there is no centralized purchasing mechanism, insurance companies are all negotiating prices, at volume, for drugs and services. As such, for every insurer, the price will be different. Moreover, when insurance companies bargain for the prices of those drugs, they are doing so against pharmaceutical manufacturers that understand the value of their product will be based on market forces, that consider curative value and the price of other therapies currently in the market. When a drug manufacturer brings a new medicine to market, the price will not be based exclusively off a model that takes into consideration the cost of production and a margin of profit. It will be based off the current price of treatment. If insurers don’t want to buy the new pill or injectable, they don’t have to. They can use the preexisting, and in the case of Covid, very expensive treatments that are less effective.
This may suck, but it is how we’ve built our system. It is the fiduciary responsibility of the pharmaceutical companies to their shareholders to sell their product at as high a price as the market will bear. Individual, uninsured purchasers are in an even sorrier state. By default, they are purchasing only one unit of a particular product, and therefore have no leverage to fight back with a market of scale.
Again, this sucks for patients, but as one political leader recently said in a slighly different context, “It is what it is.”
But in yesterday’s White House video, the President’s promised to make Regeneron’s treatment free for everyone. That is, shall we say, unusual. It will also likely come as one hell of a shock to the company.
I’ll be clear here: IF he can get that done, I’m all for it. These are powerful drugs that I will not — absolutely will not — be able to afford at their unregulated market price. I am an uninsured American citizen, and without a market intervention, Regeneron will charge through the nose for their treatment. They will not do this because they are evil. Rather, they will do so because the American healthcare delivery and pricing systems is structured to reward pharma companies with insanely high prices, that are then filtered down through our insanely expensive insurance policies.
The system is literally designed to maximize profit at every interaction point. That means the highest prices in the world for healthcare. Always.
Regeneron — and other companies who have been working in this field — have dumped a whole lot of money into this race for the cure, and they may well have gotten there first. As such, the company its shareholders will expect to be rewarded with as much money as they can possibly milk from the situation. It is, literally, “the American way.”
But maybe not in this case, says Donald.
So, we’ll see what happens. Regeneron is going to want a serious return on investment, but the President is clearly looking to make a deal. Somewhere in that Max-Min equation of price-per-unit and distribution-through-market, there is probably a way forward, but getting there will be hard. As it stands, I have no idea how it will shake out, but I do suspect that the President’s interest in the process will collapse, one way or another, after November 3. Though until then, let’s all enjoy the fact that Donald Trump has just passed Bernie Sanders on the left in his calls for Socialized Medicine.
Will wonders never cease?
