Pricing Fuzeon - Cost of Innovation?
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Case Details:
Case Code : MKTG121
Case Length : 28 Pages
Period : 1990 - 2006
Pub Date : 2006
Teaching Note : Available
Organization : Trimeris Inc. and Roche
Industry : Pharmaceutical and Healthcare
Countries : USA, Europe
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Excerpts
Fuzeon - An Innovation
Fuzeon was the 'first of its kind' drug for the treatment of HIV infection in treatment-experienced patients with evidence of viral replication despite ongoing therapy. It was to be used in combination with other antiretroviral (anti-HIV) drugs for the treatment of HIV. (Refer Exhibit III for different brands of antiretroviral drugs and how they act)...
Limited Supply
According to Roche and Trimeris, Fuzeon was difficult to manufacture as it involved an extremely complex process. Fuzeon was a large peptide composed of a precise 36-amino acid sequence.
Large peptides were difficult and expensive to manufacture because the process of creating commercial quantities of these was lengthy and complicated.
It involved 106 steps and 44 ingredients. According to them, it was the first time that such 'synthetic peptides' had been produced on such a large scale...
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Pricing Strategy
Fuzeon was launched at a premium price of 18,980 euros (US$ 20,570) per patient per year in Europe and just under US$ 20,000 per patient per year in the US. This was a record price for an antiretroviral drug and was twice the price of the most expensive HIV treatment drugs available on the market at that time (Refer to Exhibit V for list of some high priced AIDS drugs)...
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Fuzeon's Pricing - The Other View
AIDS activists and doctors in general appreciated the development of Fuzeon but were critical of its pricing. "We don't think we can add Fuzeon (to our drug list) without cutting something else.
We are excited about the drug, but we aren't sure we can afford it," said Michael Montgomery, who oversaw California's state government-funded AIDS Drug Assistance Program (ADAP).
AIDS activists insisted that Fuzeon's complex manufacturing process did not justify its price... |
Problem for Fuzeon
Despite being a breakthrough product, Fuzeon had more than its fair share of problems. Analysts felt that Fuzeon's price was out of reach for most of the people in the industrialized countries let alone those in the developing countries. Because of its high price, some ADAPs refused to put Fuzeon on their formularies...
Excerpts Contd...>>
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