“If Grandma Is on the Table, No One Will Blink at the Price”: A Former Drug Company Manager Talks About Price-Setting

At the wonderful and aptly named Tarbell, Wendell Potter's news and analysis outfit.

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Leath was stunned at the internal discussion of a $10,000 price for Xigris, which would make it the most expensive medicine on the market.  When she realized that the only ones sharing her concern were colleagues in middle management, she raised her objections to her boss. The new price could not be justified by research or manufacturing costs, Leath said, even with a healthy profit added in.

Her boss replied that justification based on company costs was irrelevant. “If Grandma is on the table, no one is going to blink at paying $10,000 to save her life,” he said. It was a phrase that came to be repeated in the Lilly executives’ pricing discussions from then on: “If Grandma is on the table . . .”

Raulo S. Frier, vice president of clinical services at pharmacy benefits manager Express Scripts Inc., told the Wall Street Journal much the same thing.  After the rumored $10,000 cost for Xigris became public – the drug would eventually be priced at $6,500 – Frier was among many in the medical community who said there would be no choice but to meet Lilly’s demands. “A lot of hospital pharmacy directors are going to be hyperventilating over the cost,” Frier said. “But they will be under a world of hurt if they don’t use it.”

In the end, Xigris did not live up to the hopes of either the company or patients. Although Lilly consistently made $100 million a year from the drug, it was pulled from the market in 2011 after further clinical testing showed it did not have a positive impact on patient survival.

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