March 13, 2003
Medicaid pays for about 50 percent of all AIDS drugs, but it is under intense pressure as states struggle with budget deficits. Government-funded AIDS Drug Assistance Programs cover about 30 percent of medications, and budget problems have already forced 16 of the 56 ADAPs to cut back on services. "We don't think we can add Fuzeon without cutting something else," said Michael Montgomery, who oversees California's ADAP.
Roche Chair and CEO Franz Hummer said the drug's price reflects the $600 million cost of development, as well as the cost of manufacturing and research for other AIDS medicines. Fuzeon's manufacture is very complicated, requiring three times the normal number of ingredients and four times the average number of processing steps. Initially, only 12,000 to 15,000 patients worldwide will have access to Fuzeon due to production constraints.
Most in the AIDS community agree demand for Fuzeon will outstrip supply even with the high price. Some analysts and activists insist Roche is taking advantage of its monopoly before other new treatments come onto the market. Others point out that Roche has to share profits with Trimeris, the company that discovered Fuzeon, on US and Canadian sales. Roche could turn a profit on Fuzeon in three years. The industry average for a new drug is 16 years, with blockbusters making money in 5-10 years.
Profits would also be affected by such factors as discounts to Medicaid, which are required by law, and price cuts for ADAPs, which are the norm. Roche has also promised to give some drug away free.