ANOTHER EXAMPLE OF MARKET FAILURE

This time it's the cost of an old drug that has been re-purposed.

British Balance Benefit vs. Cost of Latest Drugs
By GARDINER HARRIS
Published: December 2, 2008
RUISLIP, England —

Take the case of Celgene, the maker of Revlimid, a drug for multiple myeloma, a bone-marrow cancer, that in a preliminary ruling on Oct. 28 the institute said was too costly.

Celgene’s first big seller was thalidomide, a decades-old medicine now used as a cancer treatment, which is so cheap to manufacture that a company in Brazil sells it for pennies a pill.

Celgene initially spent very little on research and priced each pill in 1998 at $6. As the drug’s popularity against cancer grew, the company raised the price 30-fold to about $180 per pill, or $66,000 per year. The price increases reflected the medicine’s value, company executives said.

In 2005, the company introduced Revlimid, a derivative of thalidomide that is supposed to be less toxic, but may be no more effective. Celgene priced it at about $260 per pill, or $94,000 per year.

THIS is the market that Andrew Sullivan worships:

One reason I'm a conservative is the British National Health Service. Until you have lived under socialism, it sounds like a great idea. It isn't misery - although watching my parents go through the system lately has been nerve-wracking - but there is a basic assumption. The government collective decides everything. You, the individual patient, and you, the individual doctor, are the least of their concerns. I prefer freedom and the market to rationalism and the collective. That's why I live here.