Although the public believes that Novartis’ Kymriah is a breakthrough medicine,
the majority claim that Novartis is charging too much (overpricing). Plenty of in-depth
analyses with publicly available information reveal that with the current quoted price,
Novartis can earn more than 2.5 times what the drug manufacturer needs to cover its full
investment. However, this is not the first time Novartis is accused of overpricing. In
2013, Novartis requested for a patent on a Leukemia drug, Gleevec and claimed to be
introducing a new formulation of the drug that warranted a fresh patent. But the court
determined that the new Gleevec was virtually identical to the old one. Furthermore,
while a cancer patient in the United States might spend around $70,000 for Gleevec,
India’s version could cost as little as $2,500.
Unfortunately, these are not rare phenomenons in pharmaceutical industry. In fact,
one of the reasons of overpricing is that pharmaceutical companies simply know that the
marginal analysis for a particular drug not only includes a sense of marginal pleasure, but
a discrete, fixed amount of necessity. Nevertheless, the core alert is not just that Novartis
has overpriced the drugs, but that, while profits should support innovation, there should
be limits on them. In fact, while pharmaceutical companies claim that their high-priced
drug is due to large investment on R&D, their expenses on marketing is much more.
Former World Health Organization senior health economist Robert Yates’ exposure the
issue with reliable data and investigation. Exhibit 3 below shows the information and
Novartis’ data, though not appears as the most unbelievable, clearly indicate that Novartis
indeed spends much more on marketing rather than on R&D.
Honesty and integrity are not the strong points of some of the senior leadership in
Novartis and unfortunately there is a large number of people wanting to make it to the top
no matter without considering the consequences. They operate under the motto of do
"more with less" and pay rates are below industry standards when compared to global
organizations of a similar size. An SEC investigation found that Novartis employees gave
money, gifts and other valuables to health-care professionals to boost their sales. In fa...