Pricing Fuzeon - Cost of Innovation?

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"We need to make a decent rate of return on our innovations. This (Fuzeon) is a major breakthrough therapy. I can't imagine a society that doesn't want that innovation to continue."¹

- Franz Humer, Roche's Chairman and Chief Executive, in 2003.

"Roche claims that Fuzeon is more expensive to produce than other anti-HIV² drugs, but that doesn't justify this excessive price. Roche claims it spent $600 million developing the drug, but they refuse to open their books to verify that. Our research suggests they spent closer to half that amount, and also that significant portions of the research costs were paid for by the NIH³ including the drug's discovery and the initial phase I clinical trial⁴."⁵

- Eustacia Smith, AIDS Coalition to Unleash Power (ACT UP/NY),⁶ New York, in 2003.

"This price (of Fuzeon) is clearly above our expectations and shows that the limited amount that can be produced is supposed to be sold at the highest possible price in the industrialized countries."⁷

- Patrick Burgermeister of Zuercher Kantonalbank,⁸ in 2003.

In March 2006, Trimeris Inc. (Trimeris) announced that its net profit for the fourth quarter of 2005 (ended December 31, 2005) was US$ 3.8 million. It had incurred a loss of US$ 5.7 million in the corresponding period of the previous year. For the financial year 2005, the company registered an 80% reduction in losses when compared to 2004 (Refer to Table I for a summary of Trimeris' financial position). Analysts attributed the company's improved financial performance primarily to the increase in gross profits from the sale of Fuzeon, a drug used in the treatment of HIV/AIDS9 (Refer to Table II for Sales of Fuzeon).

In 2005, Fuzeon's sales grew by 54% to US$208.2 million as compared to US$ 135.2 million in 2004. In January 2006, the Chief Executive Officer of Trimeris, Steven D. Skolsky, commented, "We are proud to have surpassed the $200 million mark for a product that is in its second full year from launch.

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1] "Anxiety over Cost of New AIDS Drug," www.cbsnews.com, March 13, 2003.

2] HIV (Human Immunodeficiency Virus) is the virus that causes AIDS. A person infected with HIV is called HIV positive. In the long run HIV leads to AIDS.

3] The National Institutes of Health (NIH) is the primary agency of the United States government responsible for medical research. The Institutes are responsible for 28% of the total biomedical research funding spent annually in the USA.

4] Phase I trials are the first-stage of testing a drug in human subjects. Normally a small (20-80) group of healthy volunteers will be selected. This phase includes trials designed to assess the safety, tolerability, etc., of a therapy.

5] "ACT UP Creates 'Fuzeon Graveyard' at Roche Headquarters," www.users.ultinet.net, March 13, 2003.

6] ACT UP/NY based at New York, USA, is a "diverse, non-partisan group of individuals ... committed to direct action to end the AIDS crisis." It was formed in March, 1987.

7] Ben Hirschler, "Record High Price Set for New Roche AIDS Drug," www.aidsmeds.com, February 24, 2003.

8] Zuercher Kantonalbank based at Zurich, Switzerland is a major European financial institution. In 2005, its net income from interest operations was CHF 1,030 million.

9] AIDS (Acquired Immunodeficiency Syndrome or Acquired Immune Deficiency Syndrome) is a collection of symptoms and infections resulting from the specific damage to the immune system (the system of specialized cells and organs that protect us from outside biological influences such as bacteria, toxins, etc.) caused by the Human Immunodeficiency Virus (HIV).

10] "Trimeris Reports 2005 Fuzeon Sales Results: Global Sales Exceed $200 Million," www.trimeris.com, January 31, 2006.