A few weeks ago I watched novelist John Green get emotional in a YouTube video about the price of a tuberculosis test by Cepheid. The gist is that the TB test costs $10 while (likely) costing less than $5 to produce. There is acknowledgement that the product is “incredible, amazing, wonderous.” But it should be sold for $5 so that more people can use the technology because $10 is too expensive in many parts of the world that have high rates of TB. Two other points made in the video are that the company received taxpayer and non-profit organization funding in creating the technology and that the business runs on a ink jet/razor/coffee pod model – money is made on the tests, not the machine itself. The video links to a website that emphasizes patients over profits and more information about TB.

I watched the video and looked at the site and I understood where the passion was coming from. And the groups fighting for these changes may not be wrong, but I can’t say they are right. I have no idea what the tests cost to produce. But the sum of the pieces of the test, the cost of production is not the value of the product. A small molecule oncology product may cost pennies to produce but that’s not what it is worth. Or what the product costs in terms of getting it to market, ensuring access and then further research.

I did a little googling and found that CVS Minute Clinics charges $74 for TB skin testing (more if positive.) Quest Health charges $155 for a TB blood test. Suddenly $10 is sounding pretty good.

 Now the issue was “resolved” when the maker of the test agreed to lower their price and sell at cost. For sure a win for those who were looking for lower cost tests, but I wonder what the long-term implications are in terms of investment and innovation.

 All of this clearly hit a sore spot for me; I’ve done a lot of work over the years on how to define value. The pharma industry has tried to do value-based contracting but it is resource-intensive and ultimately seems to always come down to – just give it to us for less. And now we have the Inflation Reduction Act (IRA) where the government will negotiate Medicare pricing but on what basis? What is value and how does it intersect with a preset formula based on the number of years since approval? And none of this is quite like a TB test sold globally but it raised the same question. What is value? Does it mean something or is it just the lowest price possible?

 All to ponder another day.