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Thread: Pharma Industry Greed

  1. #11
    Tom, ironically, in this case and in the case of Doxy, these were both already generic drugs.

    I was outraged by this as well, but the pattern seems (with Doxy as well) the drug is sold to another company. Now, why is that drug sold? Because it isn't profitable. Although I believe that the price increase was beyond excessive, I can understand why the prices rise. It would be wonderful if we lived in a world where we could just freely give everything away, but that world hasn't existed since the Garden of Eden. "Big Pharma" has to fund R&D for new products, a large percentage that go nowhere, they also have to keep their stockholders happy, and before you talk about the "greedy wall street types" those stock holders could very well be you if you have a retirement account. Now, we can argue whether or not CEOs are paid too much, but I'm not going there, because really, a CEO salary is never the largest expenditure. This is why I get frustrated at those who attempt to demonize a whole industry.

    Update: The price is going back down http://money.cnn.com/2015/09/22/inve...ds-drug-price/

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  3. #12
    Senior Member scottae316's Avatar
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    Quote Originally Posted by njtom View Post
    I would point out that the 20-year monopoly on the production of a newly-developed medication, created and enforced by the U.S. government via patent law, is itself a form of intervention in the free market that is anti-libertarian in the sense that it prohibits individuals from producing and selling what they want, and in the sense that it represents a government-enforced monopoly.

    While the power to grant patents and copyrights is specified by the U.S. Constitution, and does promote the public good by encouraging innovation and creativity, I would say that in the case of a non-cosmetic medication, it would be beneficial to the public to limit the price that the monopoly-holder can charge while the monopoly is in effect.

    Certainly the drug manufacturer should recoup its R&D costs and in addition earn a very handsome profit. But in the absence of limits, for the case of a life-saving drug, a drug manufacturer could easily charge whatever it feels like charging, thereby bleeding the public of billions while the government-created monopoly is in effect.

    Since the 20-year monopoly is a creation of the government, it seems logical and reasonable to me that the government should have some say over the prices that are charged during this monopoly period.
    Yes, the 20 year patent law can certainly be blamed for some of this, it is by no means the majority. Also, very few people pay list price for their drugs in the US. Private insurance companies negotiate lower prices for many drugs. For some government programs they also get a steep discount. Most drug companies also have assistance programs. One way to control costs would be a restriction on advertisement. The average person watching prime time shows or sports do not need drug ads. Yes, advertise to physicians but not to the general public.

    Again, I don't think that drug companies are saints far from it, but one issue that is often skirted is that healthcare is a business that deals with products and services. If it private like the US, government run/socialized like many first world nations, or no cost (in reality someone pays for it) it is deals with goods and services. How much are we willing to spend?

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  5. #13
    Another example of the trend: Valeant Pharmaceuticals.

    Its business strategy seems to be the following:
    a) Rather than develop new drugs (which is a risky proposition), simply buy existing companies whose drugs are already on the market, and raise the prices of those drugs.
    b) After buying a company, cut its workforce and slash its R&D expenditures. (Since there is no intention to develop new drugs, there's no need for R&D.)
    c) For a particular drug, if there are no generics on the market, raise its price even more than usual. It will take some time for a generic manufacturer to ramp up production, and during that time, enormous profits will be reaped.

    The CEO says that he's simply taking steps to maximize shareholder wealth, which is his fiduciary responsibility. In that sense, he's right, but what this shows is that maximization of shareholder wealth, in some cases, can be highly detrimental to the public interest.


    J. Michael Pearson has become a billionaire from his tough tactics as the head of the fast-growing Valeant Pharmaceuticals International.
    ...
    Mr. Mannes has been taking the same drug, Cuprimine, for 55 years to treat Wilson disease, an inherited disorder that can cause severe liver and nerve damage. This summer, Valeant more than quadrupled its price overnight.
    ...
    Medicare will now have to cover about $35,000 for the 120 capsules he takes each month, and he will have to pay about $1,800 a month out of pocket, compared with about $366 he paid in May.
    ...
    Cuprimine is just one of many Valeant drugs whose prices have spiked as part of the company’s concerted strategy, which has richly rewarded its investors and made it one of Wall Street’s most popular health stocks.
    ...
    But Valeant’s habit of buying up existing drugs and raising prices aggressively, rather than trying to develop new drugs, has also drawn the ire of lawmakers and helped stoke public outrage against the growing trend of higher and higher drug prices imposed by big drug companies. This year alone, Valeant raised prices on its brand-name drugs an average of 66 percent, according to a Deutsche Bank analysis, about five times as much as its closest industry peers.
    ...
    But Mr. Pearson, a former McKinsey & Company consultant, has said he has a duty to shareholders to wring the maximum profit out of each drug. And in some cases old neglected drugs sell for far less than newer drugs for the same diseases.
    ...
    Valeant is known for buying companies and laying off their employees to achieve savings, while accumulating a debt of about $30 billion. It spends an amount equivalent to only 3 percent of its sales on research and development, which it views as risky and inefficient compared with buying existing drugs. Traditional big drug companies spend 15 to 20 percent of sales on research and development. Valeant also pays extremely low taxes because it is officially based in Canada, although Mr. Pearson operates from New Jersey.

    http://www.nytimes.com/2015/10/05/bu...kers.html?_r=0

  6. #14
    The Small Pharma Company Trying to Foil Martin Shkreli’s Price-Gouging Scheme

    Remember Martin Shkreli? Of course you do. Last month, the young former hedge funder became the smirking face of drug-industry villainy after news broke that his company, Turing Pharmaceuticals, had bought the rights to Daraprim, a 62-year-old medication used by AIDS and cancer patients to fight life-threatening parasitic infections, then jacked up the cost from roughly $13.50 to $750 a pill. Hillary Clinton condemned him. So did Bernie Sanders. So did pretty much everybody with an Internet connection. Shkreli eventually relented and said he would lower Daraprim's price somewhat, though he hasn't specified by how much or when.

    In the meantime, a competitor has stepped up to take him on. San Diego–based Imprimis Pharmaceuticals announced this week that it will now offer a made-to-order version of Daraprim for as little as $1 per tablet. The company also says it plans to offer similarly cheap versions of other generic or off-patent drugs where companies have cornered and dramatically raised prices. Not surprisingly, the move has been greeted with more than a bit of glee online. Gawker summed up the sentiment in a post titled, "Heroic Pharmaceutical Company Viciously Undercuts Martin Shrkeli's Pill Scam."

    While that certainly makes for a satisfying headline, things might not be quite that simple.

    To start, let's talk about why Shkreli's price-gouging scheme seemed like an act of such evil genius. Daraprim, again, is more than a half-century old and no longer under patent...

    http://www.slate.com/blogs/moneybox/...be_foiled.html

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  8. #15
    CEO arrested, charged with securities fraud

    -
    The reviled poster boy of drug price hikes Thursday became the target of a criminal and civil securities fraud charges.

    Martin Shkreli, a pharmaceutical industry entrepreneur previously criticized for raising the price of life-saving drugs such as those used to fight HIV and cancer, was arrested early Thursday in New York City and indicted on securities fraud charges, said FBI spokeswoman Kelly Langmesser.

    Shkreli's detention was not related to drug prices but instead stems from allegations by federal prosecutors that he illegally took stock from Retrophin, a biotechnology company he started in 2011, to pay off unrelated debts.

    Evan Greebel, a New York lawyer who served as Retrophiin's outside counsel, was also arrested on similar charges, Langmesser said.

    Prosecutors charged Shkreli with two counts of conspiracy to commit securities fraud, three counts of conspiracy to commit wire fraud and two counts of securities fraud. The U.S. Securities and Exchange Commission concurrently filed a separate civil complaint.

    Investigators accused Shkreli and his now-defunct hedge fund MSMB Capital of defrauding investors by falsifying investment returns, using company funds to settle personal disputes with investors, unjustly enriching himself with company funds and forming false ties to consultants.

    For example, Martin Shkreli told one investor on Dec. 2, 2010, that his hedge fund had $35 million assets, but it only had $700, according to the indictment...

    http://www.usatoday.com/story/money/...sted/77469752/

  9. #16
    Yeah, I knew when he raised those drug prices, they'd find something to charge him with.

  10. #17
    Senior Member scottae316's Avatar
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    Quote Originally Posted by krystian View Post
    The Small Pharma Company Trying to Foil Martin Shkreli’s Price-Gouging Scheme

    Remember Martin Shkreli? Of course you do. Last month, the young former hedge funder became the smirking face of drug-industry villainy after news broke that his company, Turing Pharmaceuticals, had bought the rights to Daraprim, a 62-year-old medication used by AIDS and cancer patients to fight life-threatening parasitic infections, then jacked up the cost from roughly $13.50 to $750 a pill. Hillary Clinton condemned him. So did Bernie Sanders. So did pretty much everybody with an Internet connection. Shkreli eventually relented and said he would lower Daraprim's price somewhat, though he hasn't specified by how much or when.

    In the meantime, a competitor has stepped up to take him on. San Diego–based Imprimis Pharmaceuticals announced this week that it will now offer a made-to-order version of Daraprim for as little as $1 per tablet. The company also says it plans to offer similarly cheap versions of other generic or off-patent drugs where companies have cornered and dramatically raised prices. Not surprisingly, the move has been greeted with more than a bit of glee online. Gawker summed up the sentiment in a post titled, "Heroic Pharmaceutical Company Viciously Undercuts Martin Shrkeli's Pill Scam."

    While that certainly makes for a satisfying headline, things might not be quite that simple.

    To start, let's talk about why Shkreli's price-gouging scheme seemed like an act of such evil genius. Daraprim, again, is more than a half-century old and no longer under patent...

    http://www.slate.com/blogs/moneybox/...be_foiled.html
    This is how the free market works, when allowed to. Is it perfect, no. However social democracies have problems that are not admitted to. The rising cost of healthcare is putting huge strains on budgets. So they just raise taxes, often on the wealthy. France did it and see what happened, investment has dried up. It is simple when you give government control of an industry, they have no real incentive to run it efficiently. Our friends from Europe wonder why we oppose single payer healthcare, it is simple. Our government runs Medicare, Medicaid, VA, and Indian Health. These four are constantly being sited for allowing overcharging, mismanagement, and poor care. Those of us Americans that pay attention (sadly it seems very few), realize our healthcare has problems but know that government is not the solution.

  11. #18
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    France has the highest social expenditure of all countries.

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