Thomas Dimsdale (born in 1712) was arguably the world’s first biotech entrepreneur. Even before Edward Jenner famously ‘invented’ vaccination in the 1770s, Dimsdale was making money from selling smallpox inoculations.
And his customers included Catherine the Great of Russia, whom Dimsdale successfully inoculated in 1769 on a visit to St Petersberg. In return he received not only payment (£10,000 plus £2,000 in expenses), but also a title: he became the first and only British Baron of the Russian Empire, with an associated pension of £500 per annum – a princely sum in the 18th Century.
As a piece of history the story of his journey to St Petersberg makes fascinating reading. But it also has surprising relevance for one of the big topics for debate among today’s biotech entrepreneurs: drug pricing.
Drug pricing in a monopoly situation is a fiendishly challenging problem
Dimsdale’s pay for inoculating Catherine, her son Grand Duke Paul and around 140 other members of the court translates into around £10million in today’s money. That, in turn equates to almost exactly $84,000 for each course of treatment delivered – the same price Gilead elected to charge for a 12 week course of its own antiviral wonder-drug Solvaldi™.
The similarity of these two prices, worlds apart in time and space, with no recognizable similarities in the healthcare systems operating 250 years apart, tells us something important. Both treatments were highly effective against a very dangerous disease, and in the absence of any alternatives the price put on a human life came in at $84,000 (not counting the title and annual pension that Dimsdale also received).
The price Gliead elected to charge, therefore, has some kind of historical precedent. A very wealthy individual (for whom availability of cash was essentially unlimited) deemed such a treatment to be worth $84,000. To adopt value-based pricing, that’s exactly the question the state (or insurance providers) need to ask today. The world’s first biotech entrepreneur, then, arguably has more to tell us about drug pricing today than vain (and ultimately pernicious) attempts to somehow link price to cost.