Wonkblog let down its readers badly in a piece on Sovaldi, the hepatitis C drug that Gilead Sciences is marketing in the United States at the price of $84,000 per treatment. While the post is headlined with the question in the title, it never makes the obvious point that the drug really doesn't "cost" $84,000.
This is the price that Gilead Sciences charges. It is able to get away with charging the price because the government gave it a patent monopoly, which means that any competitors would be arrested. In India, where the government ruled that the drug did not deserve a patent (it is a combination drug, not a new chemical compound) the generic version is sold for less than $1,000. "How do you pay for a drug that costs $1,000?" is a much simpler question to answer.
Of course if we did not give drug companies patent monopolies we would need an alternative mechanism for financing research, but such alternatives do exist as people know who have heard of the National Institutes of Health, which get $30 billion a year from the government. (The Defense Department provides another example of how research and development can be paid for upfront, rather than recovered through patent monopolies.)
If the research was financed up front we would not have to deal with Wonkblog's $84,000 question. We also wouldn't be giving drug companies an incredible incentive to lie, cheat, and steal in order to maximize the sale of a product on which they have a mark-up in the neighborhood of 10,000 percent.
Note: Typos corrected, thanks to Robert Salzberg.
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