George explains why biotech companies fail at launch despite good science. PCSK9 inhibitors were priced too high for payers to cover. Gilead's hepatitis C cure worked 98-99% of the time but cost $1,000 per pill and never talked to Medicaid, killing adoption.
Even we who don't have any products to sell yet have a commercial group because you have to start planning for how to commercialize things well in advance of when you actually have them. You have to start, you have to understand the markets. I think one of the key things for companies I've taught for a long time is you have to solve problems that actually exist, not that you think exist. And that's not only scientific problems and, you know, technical issues. It's commercial issues. You know, is there a need for this product? How would it be used? Are there some flaws in your thinking? So even if you're technically successful, no one's going to use it, right? And so you need to understand those issues. So you need people who understand the market, who can interact with the prescribers and the physicians and the health plans who are going to pay for this and Medicare and other agencies to understand whether— what's important to them.
George, without naming names, could you— can you give an example over, you know, the last 30 years or so of an example of that where a product was developed of which there was no use because there wasn't a commercialization plan?
Oh, there have been many.
Um, and Well, I'll give you the recent one. It's not that there's no use, like the PCSK9 inhibitors. These are new drugs that are really potent in reducing LDL cholesterol, reducing cholesterol. So for people who are not adequately controlled on statins, they can be a lifesaver. And so there are 2 or 3 of those now on the market. They are really good drugs, but they were priced at a level where all of the payers said, no thank you, we're not paying for this. The benefit to our patients does not merit that cost. And so they're actually used very little, and they are potentially life-saving drugs.
And so that was an error not in the product, but in how to— how to— how to price it into the marketplace.
Gilead, when they introduced their Hep C treatment, this is a treatment that cured hepatitis C, like 98 or 99% cure rate. So And I think the 1 or 2% are people just aren't compliant. You have to take a pill every day for a period of time. And they charged, you know, I think initially they charged $40,000 for that treatment. They got so much grief for that.
They got a lot of grief.
And they charged it, it was, you know, basically it was $1,000 a pill. 'Cause you had to take a pill once a day and if you just divide it up as $1,000, so people looked at the pills and said $1,000 per dollar.
Dollar pill.
Yeah. So, when you actually do the cost-benefit relationship, they save more money to the healthcare system by avoiding cancer and liver cirrhosis than it costs. But it was cosmetic, so they didn't deal with that. They didn't deal with it well.
Most of those patients on Medicaid, and they didn't talk with the state Medicaid agencies and prepare them. So they, they all had their budgets just completely ruined, and so they fought pushback. So there are ways that you need to prepare the market to interact with payers that are crucial to the success of the product.
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