A lot has been made about the subsidy of the cervical cancer vaccine gardasil and the PBAC's decision to knock back CSL's application.

CSL licences the vacine to Merck in the USA and charges them a 7% fee, yet they want to charge the same amount as Merck charge, this is a blatant attempt to make $35,550,000 for nothing.

To my mind this rip-off is shameful and shows how drug companies try to charge too much for their drugs.

Steve I am not in a position to judge whether $35m is an excessive amount or not. But dont forget that these drug companies have to put years of research into the development of these drugs. Many will never see market because they dont perform as hoped or have unintended side effects. During these years of research I imagine a large sum would be paid by way of salary to chemists and engineers to work on the development both of the drug and of the most effective delivery technique, and then the equipment in labs needs to be taken into account. Further there are trials that need to be run to prove the effectiveness and safety. Rather than charging for these, people are often paid to participate - a further cost.

Given the large lead time in turning a profit from these research activities, the effect of inflation on the cost of the investment means that much more money in terms of straight dollar figures needs to be made than the project actually cost, in order to get a real return.

I am in no way supporting a grab for money by these companies, or advocating that they should be given any price that they ask for, but there needs to be some understanding of their cost structures and how that impacts on the prices that they need to set for their products.

It's patently obvious that drug compamies are putting profits before public health. We had a good chance to change the way patents are administered when the FTA with the USA was being negoiated. Instead of Howard bending over forwards to accomodate Bush, at the time when Bush wanted our support for the mess he created in the Middle East, he could have negotiated are far better deal for Australians before one soldier was sent, as other countries have done. We are now paying the price of the failure of the Howard Gov't to stand up when it counted.

CountryGal

The research for the vaccine was done at The University of Queensland.

The point is that Merck sell it in the US for US$360 for the 3 injections after paying CSL a 7% royalty. CSL want to sell it for the same price A$460 in Australia when of course they do not have to pay themselves a 7% royalty.

I held shares in CSL a couple years back and made a tidy profit. If you can't beat them, why not join them?

Who paid for the research though, is my point. I'm sure UQ didnt fund the lot.

Look, if your gripe with CSL in this situation is that they arent proposing to sell the vaccine for $430 instead of $460 (taking out their 7% royalty in round figures), then I cant really understand it. All they are doing is selling the drug into Australia at the same price that someone else is already selling it overseas. They have vertically integrated and are making more money as a result. The royalty is for the intellectual property. The rest of the money charged goes towards manufacturing, marketing and other aspects of diong general business. Are they making a tidy profit? Probably. But CSL doesnt have a monopoly on the market, so that's hardly a crime.