
The Most Unconscionable Drug Price Hike I Have Yet Seen - tshtf
http://pipeline.corante.com/archives/2014/09/11/the_most_unconscionable_drug_price_hike_i_have_yet_seen.php
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rickdale
I needed some anti fungal cream this summer. My doctor informed me that the
cream used to be under $10, but the big pharmaceutical company bought up all
the generics and now the cream is $120.

More interesting, I got the same story from the pharmacist at rite aid. She
couldn't believe I was going to pay for that and then she said, "People are up
in arms over lots of stuff, but this right here is a crime that no one
notices. 5 months ago you would have paid a lot less."

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jisaacks
> and now the cream is $120.

What about tinactin, lamisil, lotrimin, monistat? They are all anti fungal
creams OTC for about $10. Is this prescription you had 12x as potent?

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nutmeg
I can't speak to the author, but I have a loved one with a serious skin
condition who has tried just about everything under the sun. Only recently
have they found an ointment that works and it is ~$70/oz. Not all anti-fungals
are created equal.

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exelius
This is an example of an arbitrage opportunity. It's a necessary evil of
capitalism, and unfortunately, our government has decided that free market
capitalism is an appropriate system to use for health care.

Arbitrage can be explained as thus: you have an opportunity to buy $1 for
$0.75. How many dollars do you buy? The correct answer is "all of them". In
this case, a drug had a sale price of $3 and a market value of $150 per pill
(established by its competitor), so an investor basically purchased "all of
them" and resold them at a higher price.

If your goal is maximum economic efficiency, arbitrage is necessary. It allows
companies to make decisions with the goal of maximizing profit (i.e. maximum
economic efficiency) in moral hazard situations: if something is legal but
morally dubious, if they don't do it, someone else will force them to. This is
necessary because every individual has a slightly different idea of what is
"right" and what is "wrong". Businesses don't have morals because they're not
people. They are amoral, and arbitrage is the means by which that amorality is
maintained. If a person wishes to exercise their moral calculus, they are free
to do so when making investment decisions.

I don't believe that to be the case with healthcare. In my opinion, healthcare
is a sector that really shouldn't operate along capitalist principles because
the goal of a national healthcare system should not be to maximize economic
efficiency: it should be to maximize the health and well-being of its
citizens. I know that's hard to quantify, but it's certainly not quantified by
the dollars spent on health care. IMO government price controls on healthcare
are the only solution to the problem. I don't know how that gets implemented,
but I do know that the pendulum needs to swing towards socialized medicine if
we expect things to get better.

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crusso
You're ranting against free market capitalism when the problem in the article
is the result of government interference in the free market.

Retrophin is using legal (government made the laws) maneuvering to prevent
competitors from creating generic equivalents of the drug.

So we should throw out all of the benefits of free market capitalism:
increased innovation, competition, efficiency, etc. because of cases like this
that are usually caused by something distinctly apart from free market
capitalism? If anything, this is an example of misguided government
regulation.

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exelius
I'm ranting against free market capitalism because the whole point of free
market capitalism is to ensure the price of a product is as close to its "free
market value" as possible. For health care products, the calculation of value
is inherently inaccurate because an individual places a much higher value on
his/her own life than the market would.

I do agree that this is an example of misguided government regulation. The
problem is that the government tried to use a capitalist solution to a
societal value problem (i.e. the orphan drug laws). This created additional
arbitrage opportunities. What I'm saying is that we need a serious discussion
at a national level about the goals of our health care system, and the optimal
means for achieving those goals.

We don't need new government regulation of health care; we need an entirely
new systemic approach to health care. We've recently had a national awakening
that the approach we've taken to drug abuse doesn't work, and that we were
maybe trying to solve the wrong problem in the first place. We need a similar
awakening on health care, though I'm doubtful it will happen until health care
is out of reach to all but the wealthiest in society.

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drchaos
> the whole point of free market capitalism is to ensure the price of a
> product is as close to its "free market value" as possible

You forgot competition. In a healthy market, a big difference between
manufacturing cost and final price is a strong incentive for competitors to
enter the market and undercut prices. You can see this in practise in
unregulated markets like electronics, leading to a flood of really cheap
devices, for example you can get a Galaxy S4 clone on Alibaba for about $200,
whereas an original S4 goes for $400 right now.

You can bet the Chinese would also do cheap generics, if the FDA would let
them.

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exelius
Right; but the pharmaceutical industry goes out of its way to avoid
competition. They won't develop drugs if there is too much competition.

I understand that someone needs to pay for R&D. Unfortunately, the US
government already pays for most drug R&D, but the patents get assigned to the
company doing the development in all but a few rare cases.

~~~
refurb
The US gov't does not pay for most drug R&D. It pays for most of the basic
science, that often leads to drug candidates, but the industry shoulder nearly
100% of the cost of getting a drug to market.

The combined, private R&D budget for biotech is ~$70B (not including VC
funding). Total NIH funding (much of which is not drug focused) is ~$30B.

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antidaily
From linked article: "Thiola, currently sold for $4,000 a year per patient,
will be priced closer to rival drug penicillamine, which costs $80,000 to
$140,000, Chief Executive Martin Shkreli said on a conference call on Friday."

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HillRat
Penicillamine is another example of a pharmaceutical scam; in 1995, the cost
to treat rheumatoid arthritis using it as a second-line therapy was $550/year.
Even a few years ago the pricing was in the thousands, not tens of thousands.
When Valeant purchased Aton, it appears that the first thing it did was jack
up the price of orphan drugs. But, hey, if you've got Wilson's Disease, you
have no choice but to pay whatever they demand....

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throwaway5752
"Valeant" is all you have to say. You can see what the In the Pipeline author
thinks of that company by reading the archives, too. Or any number of other
chem/r&d pharma blogs. In particular a lot of ink has been spilled over their
ongoing hostile bid for Allergan.

Valeant has a controversial business model. The acquire successful R&D pharma
organizations, drastically cut R&D spends, raise drug prices, and then use
accounting (IMO) to understate R&D costs as goodwill/depreciation for the
acquisitions. Not a fan.

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bedhead
Okay, so the price of the Thiola is ridiculous and unjustified. Who's agreeing
to pay it??? I don't know how this works, do insurance companies simply roll
over any time a company raises the price of some obscure drug by ten fold? Why
haven't the insurers (I'm guessing no one pays for Thiola out of pocket)
balked at this?

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refurb
The pricing power of a drug is related to a number of factors: (1)
competition, (2) size of patient population, (3) severity of disease.

Payers (insurers) balk at the price of drugs all the time. When there are
competitors, they have the ability to say "no, you can't have drug A, but you
can have drug B". Also, when a drug treats a disease that isn't that severe
(erectile dysfunction), they can also say "no, you can't have that drug".

When it comes to a disease like the one Thiola treats (only a few therapies,
serious disease, small patient population), payers don't have much choice but
to pay whatever the company charge. They can't deny patients a critical
therapy.

I'll bet that insurance companies will complain about the price increase, but
in the end just pay it. Sure it's ridiculous, but the overall impact to payers
is limited since the disease is so rare. They have bigger fish to fry.

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JonnieCache
Why has this been flagged off the front page?

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c0ur7n3y
[https://twitter.com/MartinShkreli](https://twitter.com/MartinShkreli)

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holyjaw
All the text and comments are crossed out with no visible explanation as to
why.

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bluthru
"Because they can"

Without oversight, this behavior is completely expected.

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GFK_of_xmaspast
Oversight by who?

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bluthru
Oh, I thought that user was talking about the article. My bad.

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StavrosK
Can't you get generics?

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mikeash
About as easily as you were able to read the article....

Sarcastic quip aside the "Update" part of the article discusses the various
legal maneuvers the company is using to inhibit the production of generics.
Apparently it is possible in some cases for the original manufacturer to deny
access to the drug to potential producers of generics, which prevents them
from doing the necessary testing needed to get regulatory approval.

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StavrosK
Thanks, the update wasn't there when I read it.

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mikeash
Funny how the mutable nature of the web can transform a reasonable question
into what looks like a stupid one, through no fault of your own. Have an
upvote to compensate.

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drpgq
As a Canadian, I'm wondering what the drug goes for here.

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pascalmemories
You still need to pay for drugs in Canada but they are generally cheaper than
in the US.

However, go to the real home of 'socialist medicine' [who thought up that
name?] in Europe or the UK, you pay a fixed price (8 pounds in England -
completely FREE in Scotland) for drugs. Drug companies get to charge a fee
which differs but if they rip the piss out of the pricing then the NHS gets to
set a price (the Pharmaceutical Price Regulation Scheme - it's complicated but
it's discussed here [https://www.ucl.ac.uk/european-institute/analysis-
publicatio...](https://www.ucl.ac.uk/european-institute/analysis-
publications/analysis/healthcare/Jo_Wolff.pdf)).

Now, countries like India are even more aggressive - rip the piss there and
they just license a local company to make the drug and you get a kick in the
nuts for your price gouging ways.

The result is companies really rip off US patients and elsewhere they are a
lot more careful and can charge dramatically lower prices (but still as much
as they possibly can) to avoid regulation or enforcement measures.

Americans really need to rethink healthcare - starting by dropping all the
pejorative stuff like 'Socialist Medicine' would help refocus peoples minds.

People in Europe don't focus all their attention on getting healthcare like
people in the US - I have a friend who uses his measly 1 week vacation every
year to come to Europe and purchase his year's supply of medication as it's
way cheaper than even his co-pay, including flights, accommodation etc, to buy
over the counter in Europe. That's just nuts.

