
2,000% price hike for infant seizure drug called 'absurd' - cordite
http://www.cbc.ca/news/health/infantile-seizures-drug-1.3318183
======
rtl49
Without more information, I think the indignant tone and format of this
article are unwarranted. Before we learn anything, we hear about the human
toll: innocent babies will die, parents are distraught, and doctors are
furious. But we're provided with no clear information on the reason for the
price increase.

"When Mallinckrodt acquired Questcor in 2014, Synacthen Depot was one of the
products in the portfolio. It was losing money then and still is. Moreover, in
the spring of 2014, Mallinckrodt was told by the existing supplier of the
product that they would cease production in early 2016," a Mallinckrodt
spokesman said in an email to CBC News.

So the company faced an unexpected reduction in supply, and the drug might
have been unprofitable at the previous price. One can object to the fact that
the means of pharmaceutical production are privately owned, but given that
these are not currently non-profit institutions, the outrage seems misplaced.
There's nothing "absurd" about it.

Edit:

I'd like to address some of the commenters, who seem to have misinterpreted my
comment as a defense of this company, or the pharmaceutical industry in
general.

This comment is an objection to the style of journalism in this article: light
on information, heavy on emotion. I've said nothing in defense of the
corporation.

Some have suggested that these corporations should not increase prices in
order to uphold some set of moral principles. I take it for granted that
corporations are only answerable to power, and any limitations you might wish
to impose upon them must either take the form of collective action
(boycotts/protests) or regulation. Perhaps motivating either of these was the
intent of the article, but if so the author went about expressing this wish in
a way that I find objectionable, by appealing to emotion rather than reason
and disguising an ideological belief as factual reporting.

~~~
themartorana
There exists a moral line, somewhere. In this case, parents of children with a
rare, dangerous condition and the doctors that treat them find themselves on
one side.

If the price increase had been negotiated, or given fair warning, or was tied
to any documentation of the cost of production, it would be much more
tolerable - or at least understandable.

Instead, this follows a recent trend of exploiting sick people for profit
through mind-boggling price increases for critical medications after sometimes
decades of very low prices. There is most certainly not a 2000% increase in
the cost of production - if there were, there would likely be a lot more
transparency.

~~~
Frondo
Yeah, you know what it seems like to me? That old saying that you can't put a
price on human life, that's what these pharma companies are testing now.

"Will they pay, even if we raise the price by 20x?"

That's not the kind of behavior I'd like to look back on for my own life, when
I'm at the end of my days.

~~~
wyager
> That old saying that you can't put a price on human life

It's a nice platitude, but it's obviously untrue. The unstated implication is
that a human life actually has infinite value, which is even more obviously
untrue.

It's easy to find an upper bound on the value of a human life; would you be
willing to pay ten trillion dollars of public money (which would otherwise be
hypothetically used to finance schools, research, etc.) to save the life of a
single child?

------
rm_-rf_slash
I don't know much about pharmaceutical policy, but I have an idea. I would
like to have it torn to shreds if it means we can have an idea of a more
equitable process of creating medicine.

What if, in a single payer model, a resesrching entity that creates a new
treatment which is in turn approved by the government, automatically forfeits
any rights to the drug, but is guaranteed royalties for 20 years or so?
Manufacturers don't have any limits on what they may or may not create, but
there is a minimum price at which the government will pay for it, similar to
the "cost+profit" model seen in the defense industry. Likewise, the obscure
cheap drugs that get abandoned then have the rights purchased by sociopathic
hedge fund managers would instead be manufactured by the state and sold at
cost.

Is that so crazy?

~~~
whistlecrackers
Yes. A free market is a solution.

Naturally regulated markets satisfy customer demands at the lowest cost when
compared to the results any other system.

~~~
beagle3
Free markets are good a at lot of things, but staying free is not one of them.
(Similarly for a democracy, by the way).

A "naturally" regulated market eventually converges into one all-powerful
monopoly player - it's a stable configuration that maximizes the profit for
the owners of that monopoly.

So you have to regulate this "freedom" away from disappearing - in the same
way that GPL regulates BSD freedom away from disappearing.

~~~
mumumuyou2
Coca Cola has been around for 129 years. How many centuries does this process
take?

~~~
beagle3
Coca Cola is a luxury item. If they raise the price too much, no one will buy
it, and that puts an upper limit to the price (and makes consolidation less
profitable). And it still may happen if not for antitrust - I'm sure a
combined RCPepsiCoca Cola company will be more profitable than three
independent ones.

The only reason DataPrim price could be hiked was that the people who need it
will actually pay for it. Same with ACTH. A captive audience is a wonderful
thing -- something Coca Cola would love but doesn't have.

There were ~100 car manufacturers 100 years ago, how many are there now? (And
cars are not as essential as ACTH)

There were tens to hundreds of media companies up until the 1980's. Now, there
are essentially six[0]. And if antitrust didn't matter, there would probably
be less.

Similar things are happening in pharma[0].

It is one aspect of capitalism that's to blame: "free market". If you
monopolies are legal (and in a totally free market, they are), then you will
get monopolies because they are more effective at extracting rent than
competition. we've just seen this happen twice in the pharma market.

[0] [https://en.wikipedia.org/wiki/Media_cross-
ownership_in_the_U...](https://en.wikipedia.org/wiki/Media_cross-
ownership_in_the_United_States)

[1]
[http://www.ft.com/cms/s/0/6aad8ebe-e9c0-11e4-b863-00144feab7...](http://www.ft.com/cms/s/0/6aad8ebe-e9c0-11e4-b863-00144feab7de.html)

------
beagle3
This is pure capitalism in action, and an important datum about what happens
in free markets. [see edit below]

Questcor is cornering the market - this has nothing to do with research or
availability. In 2012, they acquired the manufacturing of the pig-pituary-
gland version of this drug, called "HP Acthar Gel"[0], and hiked the price
from $50 to $28,000 per vial. In June 2014, they acquired the synthetic
version called "Synacthen Depot" and modestly hiked it by just 2000%. The
generic term naming both is ACTH, which is cleverly (?) disguised inside both
names.

This is greed, plain and simple - now that Questcor owns the market, they can
name any price they want, or the infantile spasm kids suffer greatly (die, or
suffer developmental problems of all sorts including retardation). There are
other diseases treated with ACTH, and dropping treatment due to cost has
effects almost as severe.

Show me the parent who would let their baby die or become retarded because the
price was hiked. That's an example of what any completely free market will
converge to.

[0] [http://www.nytimes.com/2012/12/30/business/questcor-finds-
pr...](http://www.nytimes.com/2012/12/30/business/questcor-finds-profit-for-
acthar-drug-at-28000-a-vial.html)

edit: I stand corrected in my use of "pure capitalism" \- government
regulation makes it very much not pure capitalism. But the monopolizing of
production that we see here _is_ a real-world result of capitalism (pure or
impure) - the assumption that "if there's money to be made, some other entity
will rise to the challenge" is not supported by evidence in small markets
(such as ACTH). If it weren't, there would be no need for antitrust laws.

~~~
narrator
This isn't pure capitalism. This is a result of what Mises called "license
monopoly". See "The Monopolized Commodity" under
[https://mises.org/library/monopoly-
prices](https://mises.org/library/monopoly-prices) for more discussion of
this.

"Under monopoly, a greater part of the specific factors of production
concerned will remain unused. The common feature of all instances of monopoly
prices is that part of the supply, which under competitive conditions would
have been offered on the market, is withheld from the market. The most
spectacular and objectionable instance of this withholding is the purposeful
destruction of the commodities concerned. It happened mostly with consumers’
goods (e.g., coffee) but sometimes also with factors of production."

There are other sources of this drug, notably foreign production, but they
don't have the proper licensing. Thus you get a license monopoly. There are a
lot of drugs developed overseas that are effective but they are unknown in the
U.S market because they are not approved by the proper license monopoly
granter. Under pure capitalism, these products would be allowed on the market
and independent rating agencies would ensure their quality.

~~~
beagle3
I take it back; You are right that it is not pure capitalism - in pure
capitalism, there would not be FDA regulation which definitely plays a huge
part here. But I think the end result is indistinguishable.

I'll grant you that it is not YET the result of pure capitalism, assuming that
there is, indeed, foreign production. But what stops the buyer from
consolidating foreign producers as well? It's good for every producer involved
- together, they can raise the prices even more.

Totally free markets are unstable.

------
jostmey
Quote: "The drug is long off patent."

So why not order the drug from China or India? Is the drug expensive to
manufacture? Or is it that the Canadian government will only order the drug
from select countries? I wish the article dug a little deeper.

~~~
imgabe
There may be requirements to purchase the drug from manufacturers that comply
with government regulated quality controls.

Not that someone who really needs the drug couldn't seek out an online source
to get it cheaply from overseas, but doctors may not be able to legally
prescribe it from those places.

I don't have any knowledge on the subject though, just speculating. At least
in the US buying directly from overseas pharmacies seems to be more or less
illegal.

~~~
mgkimsal
"doctors may not be able to legally prescribe it from those places."

We just get a prescription and have it filled wherever's cheapest. It's not up
to the doctor to say where it can be filled...

~~~
imgabe
It may be illegal for pharmacies operating in Canada to buy from those
manufacturers then, I don't know. I'm just saying there are possible
additional risks with buying drugs of unknown provenance. It's not necessarily
as simple as "just buy it from China or India".

------
forrestthewoods
What's the answer here? Should the government pay for manufacturing of generic
drugs that are non-profitable but "essential"? Let the tax payers eat the cost
of such drugs? There's more than a few like that. I believe snake venom
antidotes are often on such lists.

(note: I did specify generic drugs. Not drugs still under patent exclusivity
windows. Which is a valid but separate discussion.)

------
pja
Scott Alexander wrote a whole article on the difficulties in bringing
competitors to out of patent drugs to the US market:

[http://slatestarcodex.com/2015/09/24/the-problems-with-
gener...](http://slatestarcodex.com/2015/09/24/the-problems-with-generic-
medications-go-deeper-than-one-company/)

------
scoot
"2,000% price hike" is a link-bait headline.

Not to excuse the hike, but lets call it what it is - a 20 times increase.

Any use of percentages over double-digits is asking for confusion. And using a
four-digit percentage is intentionally misrepresenting the scale of the
increase.

------
trhway
>The price was so high that Alberta delisted it in July,

and government chickens out and fails to protect its citizens. The government
has the power to treat it for example as public utility and negotiate the
price based on that premise.

------
emergentcypher
I'd like to know why people would consider giving their children a drug named
Absurd in the first place!

------
josteink
Hopefully more incidents like this will prompt people to question whether
granting patents are _actually_ useful to society or not.

Patents are after all an artificial (and supposedly temporary) monopoly
enforced by society on behalf of a private entity, because society deems the
value of this protection will create something beneficial to society as large.

Using patents to bump prices of existing, already profitable medicines hardly
seems what patents were made for.

~~~
danielahn
There is no patent on the drug.

~~~
blucoat
This is what confuses me, so maybe someone with a better understanding of this
market works can elaborate. How is it that the drug is not patented but the
manufacturer has the exclusive right to sell it? It blows my mind that one
company can overnight make such a huge change and there is no competitor to
turn to.

~~~
pja
In the US, you still have to get FDA approval to sell drugs that claim to be
reformulations of another manufacturer’s product. This isn’t entirely baseless
- demonstrating your version’s bioequivalency to the original is part of the
process, which doesn’t seem like an unreasonable thing to require.

Unfortunately, the whole approval process still costs in the low $millions at
a minimum & so for out of patent drugs that are a pain to manufacture, and/or
have small numbers of patients, they just aren’t financially viable once you
factor in the approval costs.

Part of what you see when a drug company steps in and jacks up the prices like
this is that the new owners know that the FDA approval process combined with
their pre-existing manufacturing capability gives them an expensive moat to
bridge for other companies that isn’t justified by the size of the market, so
if they’re willing to take the reputational hit that the previous owners
weren’t then they can jack up the prices enormously since the patients have
no-where else to go.

