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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (13434)	10/11/2004 9:56:54 AM
From: Biomaven	Respond to of 52153

Good article from Forbes: Pharmaceuticals Our Health Cost Delusions Matthew Herper, 10.11.04, 6:00 AM ET NEW YORK - To see how topsy-turvy health care spending can get, there's no need to look back any further than the past two weeks. First, Vioxx, an arthritis drug whose main benefit was a reduction in stomach side effects, was pulled from the market after five years for safety problems. It had reached annual worldwide sales of $2.5 billion, filling the coffers of drug giant Merck (nyse: MRK - news - people ). A week later, Chiron (nasdaq: CHIR - news - people ) said that because of problems at a Liverpool, U.K., plant, it would not be able to supply any influenza vaccine this year. Because only two firms make flu shots in significant amounts, that means the U.S. will have, at best, 18 million fewer flu shots than it did last year. There will be a real cost to that shortage. "We will have to rely on the good graces of vaccine producers and the public to redirect the use to high-risk people," says Carolyn Bridges, an epidemiologist at the Centers for Disease Control. "It is certainly possible, and maybe likely, that there will be some high-risk people who cannot find vaccines in their local communities" What's wrong here? For many patients, Vioxx's stomach-safety benefit was probably cancelled out by its cardiovascular risk. But the market for arthritis drugs--which can cost almost $3 per day--was appealing enough to entice Merck, Pfizer (nyse: PFE - news - people ) and Novartis (nyse: NVS - news - people ). Meanwhile, in the past year Wyeth (nyse: WYE - news - people ) became the latest drugmaker to exit the flu vaccine business. The flu kills 36,000 Americans per year. But at about $6 per pop, flu shots aren't a profitable enough business to draw drugmakers into what is a rather difficult and expensive business. (The vaccinations are seasonal, and take months to make.) "People would pay $20 a capsule for a drug, but they want vaccines to be measured in pennies," says Anthony Fauci, head of the infectious disease division at the National Institutes of health. "That really has to change. There's a lot of discussion that given the importance of vaccines, we shouldn't really relegate it to where there's such a major disincentive for companies to be involved." One problem, of course, is that we are much better at paying for intervention--fixing what's broke--than preventing it in the first place. But another is that vaccines, like the newer biotech drugs made by Amgen (nasdaq: AMGN - news - people ) and Genentech (nyse: DNA - news - people ), are difficult and expensive to produce. Unlike older medicines, which are easy-to-manufacture molecules, they take lots of time and effort to produce. Society needs to find new ways to balance these costs--and to end its love affair with pills that fix things after the fact.