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Drug Goes from $13.50 a Tablet to $750, Overnight (nytimes.com)
830 points by m_haggar on Sept 21, 2015 | hide | past | favorite | 450 comments

I am a fund manager and I have followed Martin Shkreli since his prior company, Retrophin, went public about two years ago. Simply put, Martin is a sociopathic criminal with a well-established, and consistent track record of deceit, recklessness, failure, and just plain old stupidity. But he is also hyper-aggressive. He is currently living in Switzerland, and it's my understanding that he fled the country in order to avoid prosecution and asset forfeiture.

Anyway, Martin is running the same playbook at Turing that he did at Retrophin, which is to find some old orphan drug and raise the price by orders of magnitude. It's believed insurers won't have a choice but to pay since there are no competitors. If you want to see how this has worked out in the past, feel free to google "KV Pharmaceuticals Makena" which did something similar a few years ago, only to have it bankrupt the company (which would be an outcome completely consistent with Martin's history and tactics).

For a fun read, check out the lawsuit filed against him by Retrophin. In all my years of investing, he is one of the most unique scumbags I've ever come across.


When I saw the headline I had a feeling it would be Turing. I was contacted by a recruiter last year and had a couple conversations about joining them as they were looking for an IT guy - the CIO was doing all of that work and they wanted someone else to be hands-on and eventually build a team. Sounded like a great opportunity and things were progressing. Then I bothered to Google them...

Once I read up on Martin Shkreli I told them that I did not think it was the kind of place for me and withdrew. I have no idea if they would have hired me or anything, but just reading about him gave me a sick feeling in my stomach.

How did they respond?

Maybe they bought his apartment and put his rent up by 5,455%

Those apartments are so rarely used that the impact on the rental system would be minuscule!

Sure, but that's just San Francisco.

I never got a direct response from them, but since the recruiter continued to reach out to me for other opportunities they must not have been too upset about me bailing on the meeting. I did avoid using any terms like "criminal behavior" in my response. :)

Just wanted to clarify one mistake - it was actually February of this year. I checked my emails after seeing the dates listed in the articles.

Shkreli seems like a scumbag but how is that different from what Valeant, Mallinckrodt and others do. Buy another pharma company and jack up the price. http://www.wsj.com/articles/pharmaceutical-companies-buy-riv...

I'm honestly looking for an answer here. Maybe there is a good reason Valeant can and should be able to get away with it.

Short answer is they're not different. He likely has a brash personality making him an easy target.

In other words, blame the game. From where I come from it seems very strange that medical services / prescribed medicine has free floating 'market prices' in the US. There is no such thing as a functioning market for these products - you have complete information asymmetry as well as government enforced monopoly on medication (pharmaceutical patents). Letting the providers set the price is just asking for trouble. Negotiating medical prices on government level and setting fixed prices for medical services (adjusted periodically) is absolutely necessary for a functioning general healthcare.

Your post tickled my curiosity. So I went to Wikipedia... and found this: http://imgur.com/lNpPWkP

I was less surprised by the vandalism than I was by how tame it was.

Looks like it's gotten a bit worse: http://imgur.com/a/7X0Wt

The sad thing is that it made my try to remember the biography of living persons rules to figure out whether any of those quotes could be kept if they were noteworthy and properly sourced.

It seems to me that the overall result would be other companies start manufacturing the generic and sell the drug for maybe 20% less than Martin and over time the price drops back down towards where it once started. In the meantime, this company either goes bankrupt or is sold off.

Or the government passes a law capping how much you can raise the price of a generic drug over so many years.

That's the loophole though, the quantities are so small that realistically, no pharmaceutical company has the incentive to make their version of the drug, even at $750 per dose. There are still costs to making a drug that's off-patent, and sometimes the number of patients being treated is only in the double digits. Additionally, a competing drug released at say, $500 per dose would still be considered predatory anyway. This is really the backwater of pharma.

The case of KV Pharmaceuticals that I cited was a little different since compounding labs had already been making the drug Makena. In that case, the FDA actually sent these labs a letter essentially saying, "Go ahead and keep making the drug even though KV now has a patent for it. We are choosing to not enforce their patent because their price increase was bs."

Maybe the government can prove its worth and get off its ass and quickly figure out how to close this loophole, then go after Martin and others like him.

The case of KV Pharmaceuticals that I cited was a little different since compounding labs had already been making the drug Makena. In that case, the FDA actually sent these labs a letter essentially saying, "Go ahead and keep making the drug even though KV now has a patent for it. We are choosing to not enforce their patent because their price increase was bs."

KV never had a patent for Makena. What they did have was "data exclusivity" which meant the FDA could not approve another version of the drug for at least 5 years.

What they were counting on was the FDA clamping down on the compounding pharmacies, since they weren't selling an approved version of the drug.

The FDA, seeing KV's strategy, declined to shutdown the compounders which resulted in KV declaring bankruptcy. KV restructured, reduced the cost of the drug and created a sustainable business. They were acquired by Valeant I believe.

They should just allow importing drugs from other markets that have good enough quality standards - like the EU or Canada I guess. Problem solved.

I'm sure he'd be happy to let that go unprotested ... "Skrelicame to attention after his attempts to have the FDA not approve drugs being produced by companies whose stocks he was shorting".

Who needs morality in the free market, right?

I often see the "free market" referenced in contexts like this where it's the interactions of a corrupted government entity that is at the root of the trouble - yet the free market is the entity in the crosshairs.

Where is the government interference here? How is the FDA or whomever enabling this behavior?

The FDA was the big lever that Skreli was attempting to use to skew the market in his favor.

If the FDA weren't so powerful, flawed, and easily corruptible, the strategy would make no sense.

So on a weaker FDA it would be exactly the same, except that now your guarantees about the safety and efficacy of the drug are reduced. How is that better?

How about a weaker FDA that simply advised people on the safety and efficacy of drugs rather than forcing everyone to follow their rules? That would technically be a weaker FDA, but enable more freedom for patients and their doctors to pursue treatments that they found efficacious.

How about a weaker FDA that allowed the import of drugs from other countries? That would create international scale competition for the US drug purchasing market.

There are lots of ways that we could get creative in solving these problems if there weren't a monolithic government agency in the way of our personal freedoms.

Because when people are fucking dying they tend to try whatever options they have left even if they're not guaranteed to work 100%. So now the market every disease for anyone in a precarious position will be saturated by shitty chemicals tested with far less rigor.

Seriously, it's like you're just ignoring what happens in every country that currently does have weaker systems and who look up to the strong regulatory practices of the US and Europe for exactly that reason.

That is a very biased view of the situation.

Pharma companies try to put the best face on data to get a drug approved. Analysts try to approach the data in an impartial way. If an analyst looks at the data and sees issues, it makes sense both ethically and financially to push for the drug not to be approved. Ethically, if the drug doesn't work as advertised, it is better that it is not sold as a cure. Informing the FDA of your analysis is a duty. Financially, if you think the drug doesn't work, it makes sense to short the stock in the belief that it won't be approved.

Pharma companies always present it as hedge funds trying to kill their products, but if the data is strong and the drug works, the analyst could just go long on the company instead.

Yes, it makes sense ethically to push the FDA not to approve a drug you think won't work. It also makes sense financially to bet that the FDA won't approve a drug that you think won't work. But it doesn't make sense ethically to do both, both directly because it creates a conflict of interest, and indirectly because that very conflict of interest undermines both the objectivity and the credibility of your recommendation not to approve the drug.

You are arguing ... what, here? That people with some sort of knowledge of a product/company/industry's prospects shouldn't be allowed to buy/sell positions in that company?

If I understand you (and I may not), and we were to come to the conclusion that "there ought to be a law", I have no idea how that would even be structured/written.

Yes, I think you are correct that you did not understand me. I'm sorry.

Please don't apologize - I'm apparently the one with reading comprehension issues.

I don't think your view of the situation is any less biased. The problem is that there is very little incentive to ever reject a drug. Shorting is the only case I can think of and even that assumes the drug in question is important enough to actually move share price.

Remember the FDA is primarily concerned with a drug not harming people, the extent to which it's actually beneficial is of secondary interest at best: http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugs...

> Remember the FDA is primarily concerned with a drug not harming people, the extent to which it's actually beneficial is of secondary interest at best

Uh... no. Just from that page, it states the FDA ensures "that drugs and devices are safe and effective for their intended uses". If safety was the only concern:

1) Why does the FDA approve indications?

2) Why has there been prosecution (possibly violating the first amendment) for promotion of off-label uses?

3) Why does the FDA have a "breakthrough" designation that fast tracks approvals solely based on their effectiveness?

4) Why do Pharma companies frequently run new trials using different end points in an effort to get a drug approved when the original end points they used showed no effect? Why have there been cases when the FDA didn't approve a drug because they declared the end point used in the clinical trials was meaningless for the indication?

I think it is fairly clear that a shitload of time and resources at the FDA are spent deciding whether drugs are effective and if the data from the pharmaceutical company shows effectiveness.

Edit: I should also add the whole DESI review[1] in the 1960's shows your statement is complete nonsense. Drugs that the FDA previously approved for safety before 1962 were re-analyzed to classify their efficacy. So, the FDA reanalyzed thousands of drugs they had already determined were safe to look at whether they were effective.

[1] https://en.wikipedia.org/wiki/Drug_Efficacy_Study_Implementa...

From the entire page you found the one case where the word "effective" is used and it's used after the word "safe".

Here's what the page says about new drug applications:

The IND application must contain information in three broad areas: * Animal Pharmacology and Toxicology Studies - It must be reasonably safe. * Manufacturing Information - The company can make consistent batches of the drug. * Clinical Protocols and Investigator Information - Detailed protocols for proposed clinical studies to assess whether the initial-phase trials will expose subjects to unnecessary risks.

The 3 requirements around the new drug application are all safety based. Later on they look at efficacy, but it's later in the process. Efficacy doesn't mean it has to be very effective just somewhat. Read the references for your Wiki page, the FDA is concerned with removing harmful drugs.

Given the multiple issues Martin has faced over the years, I think it's fair to say that 'impartiality' is the least of his motivations.

"If an analyst looks at the data and sees issues" - what are they? A stockbroker, or pharmaceutical scientist? How many are both?

It would only make financial sense to push for the drug not to be approved -if- you had a position that made a gain from that, but let's not pretend like Martin was doing so out of any source of ethics.

I don't care about Shkreli, I care about whether the practice is ethical.

There are plenty of pharma analysts who have used the same techniques who have medical degrees, have worked on clinical trial design at pharma companies, etc. They often aren't the names you see when pharma complains about people shorting their stocks because pharma only wants to point at the head of the hedge fund who has no life sciences expertise. They don't want the public to know about the dozen experts the hedge fund manager is paying to analyze the filings in order to challenge the filings and decide whether to short the stock.

No one complains if your analysis shows the molecule is great and you go long, it only becomes evil if your analysis shows the molecule is crap.

And if pharma analysts who have medical degrees want to analyze filings from these companies, great.

But the specific example is talking about Martin Shkreli doing this - a man whose formal education is a Bachelor of Business from CUNY.

And ethics have roots in motivations. Shkreli couldn't give two hoots whether the drugs had efficacy or not. He wanted them to fail approval only because of his position in the companies.

But who provides the quality standards oversight? The drug is apparently produced in India. What if pills were shipped to the US and it was found after the fact that many batches contained unacceptable levels of iron? Who to blame?

I'm sure Canada has decent oversight, but who wants to say that the solution is no direct US agency oversight, and that we want a "Pharmaceuticals-NAFTA"? It seems funding oversight with a "homeland" agency is one issue you could get bipartisan support on.

While sure, I doubt many have a problem with medical tourism, I'm not sure bringing drugs across the border intended for distribution without FDA approval is the answer.

On the other hand maybe countries working together at the agency level to ensure their oversight measures are in compliance with some agreed upon standard is a sane way to move forward. But then who maintains the list of approved drugs? Is that power given to some international body? Or does the FDA still have to approve drugs for distribution and only alternatives are brought in? And then what about drugs that are patented in the US (like this one), but freely available in other markets from other manufacturers?

It seems a worthy enough goal in general, but I don't think a fully libertarian approach to the problem comes close to being the right answer either.

> Pharmaceuticals-NAFTA

I'm not a libertarian and I'm in favor regulations when needed, but in this case I think that recognizing drug testing and quality controls between countries that have similar standards would be a great help at curbing costs. "FDA approval" in this case should mean that the FDA could recognize that if agency X from Country Y says that a generic pharmaceutical is safe, you don't need to do the same tests again.

Of course this should work both ways - I'm from the EU, and I'd like to be able to get drugs manufactured in the US when they're cheaper and just as safe.

We import all kinds of stuff from all over the world and enforce quality standards very well. The current situation is more like protectionism than consumer protection in many cases.

While broadly true, this is an area where counterfeiting is easier, detection is difficult, enforcement is harder, and legitimate manufacturing is often expensive.

In other words, exactly the conditions to encourage all kinds of abuses.

That is all true but we don't have to buy from shady producers. Canadian and European producers supply their own very safe and mature markets. Buy the stuff that the UK NHS buys and at the same prices - their scale gets them good deals (with notable exceptions). This can't be worse than the current deal.

This might surprise you, but conditions that encourage abuse also encourage people to find ways to avoid having their abuse detected.

Yeah, it can be worse than the current deal. Just look at the problems China has with counterfeit food.

This whole thread is about a horrible abuse present in the current system. The potential for abuse in an alternate system does not disqualify it. There is no perfect system and bad actors are everywhere. However, I don't see terrible endemic problems in the UK, Canada or the Eurozone from importing drugs. I'm sure they exist sometimes. But in the entire rest of the G7 drug costs are less and their outcomes no worse than the US.

The counter argument is that most new drugs are developed in the US (due to the large profit margins here) and that the UK, Canada & the EU are essentially free riding off the US in this area.

Not sure I completely buy this argument, but there it is.

If the problem is abuse, that a proposed successor system may not be better is a major source of concern.

If the situation is as I read it:

- Importing drugs from countries with reliable drug regulatory infrastructure would have substantial benefits, including a check on cost (sorely needed), and improved availability of less profitable drugs

- Other similar countries are doing this without seeing measurable negative health outcomes

then getting hung up on this 'major concern' that seems to have been rendered moot elsewhere makes most people worse off. Mentioning the existence of potential (and unlikely?[1]) downsides is not an adequate cost-benefit analysis.

[1] not that it's unlikely that there will be people who try to take advantage of the system, but it seems unlikely that given appropriate regulatory care, the downsides will be unmanageable to the extent that they cause the change to allow drug imports to have an overall negative impact.

[edited for clarity, including the addition of the footnote]

Did you miss the main caveat? Countries with good quality testing standards. If you have many countries with very similar quality assurance standards then surely it makes sense to rely on the work of others, or have a revised (shorter, cheaper) process for drugs to go through which have already been approved by certain countries.

I don't think anybody is suggesting mass importation of low quality Indian or Thai versions of drugs.

Can this drug be reproduced by others? Is it simply a licensing issue?

All of the drugs mentioned in the article have had their patents expire long ago.

Even though it's $750 per dose now, since they have exclusive control over the market they could decrease it to whatever whenever they wanted to starve competitors.. probably after said competitors have invested in doing it.

This is a possible strategy, but is rarely used, as it is very risky (, it is likely to cost a great deal of market share in the long term). I have looked into it, and found very few examples of a company which tried to lure a competitor into a market, then under-sell them. The opposite (under-sell competition to gain market share then hike prices) also appears to be quite unpopular in the real market, for the opposite reason (it will surely gain market share in the short term, but can cost a great deal of money). These are very popular theories, and there are a few examples of those who have tried both strategies, but those examples are almost all cautionary tales.

caseysoftware's argument is not that they're trying to lure a competitor into the market, but rather the threat that, upon spending all the money to reverse-engineer the drug and enter the market, the incumbent could drop its price to $20/dose and the new entrant would be stranded with no way to recover their NRE costs in an economically relevant timeframe.

Both companies might be profitable on a marginal cost basis at $20/dose, but only the incumbent would be profitable on an average cost basis.

Because of this looming (unstated) threat, a competitor chooses to avoid the market.

There is no need to reverse-engineer the drug, as its under an expired patent—so all of the processes and techniques used are open and theoretically (if the patent office has done its job right) should be easy for a competitor to reproduce.

this is in fact one of the stated goals of the patent system: a limited monopoly in exchange for the advancement of public knowledge.

I was thinking less of the reverse-engineering costs and more of the hard production costs. Equipment, personnel, production time, etc. Those are non-trivial costs even if the complete formula and process is known.

right, so the drug that was getting sales of 600k per year was probably not worth the hassle of maintaining a compliant manufacturing line. does that not suggest a price rise was valid?

It's a time-arbitrage problem: there's no one else producing it (thus no free market) so they get to charge literally whatever they want since they're the only manufacturers, for as long as it takes a competitor to build another competing production line. This is reprehensible.

Once competition returns, the price drops again, and no one makes ludicrous profits anymore. But if the expected returns in competitive conditions are miniscule, there may not be sufficient incentive to produce a competitive market for this individual drug again.

Yes, I largely agree with the logic underlying your analysis (though not your conclusion), and did not mean my post to say that they were trying to lure competitors into the market, but more to say that they would (though I understand your reading of it probably makes more sense than my writing).

If you believe that the eventual average cost would prevent a new entrant, the new entrant would have to know (or believe that there was a high probability of) the entrenched producer would cut prices upon the second producer's entry. I do not find this to be particularly likely. In any case, the first producer would be betting on the likelyhood of the second producer's estimation of the likelyhood of a downward price change by the first. This strains credulity (, in my view).[1] I think that if anything, your argument proves too much, as no company would even enter a competitive market if what you describe is the case.

[1] https://en.wikipedia.org/wiki/Romanoff_and_Juliet_(play)

I'm not suggesting that companies avoid competition at all costs. I am suggesting that the right price to model when considering entering this market is $13-20, not $500+/dose.

I think its somewhat common, and even occasionally successful:

Amazon prime costs amazon money, and the original fire tablets were sold at cost - i suspect the new 50$ tablets are not very profitable either

Walmart has commonly been accused of this practice for various products

Google's original Nexus 7 tablet

I believe Apple ended up losing money at least a quarter or two on the app store/itunes

Granted there are few examples, but its certainly prevalent enough that its a legitimate business concern - the bigger disparity is that it takes a pretty enormous size for a company to succeed in such a tactic, I doubt turing has the kind of capital to lose that the likes of Walmart, Apple, Google and Amazon do.

Those are good examples, but I would argue that if a practice is sustainable (and often sustained), it is not problematic. If Amazon wishes to provide Prime at a loss to encourage customers to buy products which Amazon will make money on (enough to compensate for Prime), is there a problem? Would there be a problem if Amazon offered to ship things sooner in exchange for a promise that you would shop at their site more often (even if this promise plan cost them money)?

Buyers don't have to just go on price. They can take past behaviour into account. They could justify this in the name of ensuring continuing supply at a reasonable price.

So, even if this company does always price their product at less than the new generics they've probably lost the trust of the buyers.

I don't get this, the drug is available from Sigma[1] for $51.50 per 250mg, with a dosage of 50-75mg per day for a patient. So clearly someone can make it more cheaply. I get that Sigma is research chemicals not medical grade, but seems to me someone could figure this out. FDA approval must be the issue. [1] http://www.sigmaaldrich.com/catalog/product/fluka/46706?lang...

One word: Bioequivalence. Having the correct active ingredient does not imply that drug delivery and efficacy are equivalent unless you can prove it by comparing it against a known and approved formulation in human volunteers, The burden of proof is significantly less than that of getting a new compound approved, but still a major sinkhole for money.

The correct way to handle this would be for the FDA to hand out compassionate use permits for patients to import their own drugs since it is clearly unavailable for a reasonable price in the US.

Maybe the big drug retailers (CVS/Walgreen/Walmart) could be interested in either owning or partnering with generic makers, as they can derive secondary benefits such as reputation/traffic even if a particular drug is temporarily unprofitable. They could also attempt "premium" generics like what Costco did with the Kirkland brand. You need a player that can benefit in other ways to prevent someone from gaining a monopoly through price manipulation.

Not familiar with the industry, but I don't think the problem can be solved this way (at least in the short term). Simply by the distribution of drugs/prices, there seems to be a very large number of low cost drugs susceptible to this tactic. There's ample space for them to pick a drug now and then and put abusive prices all of a sudden, while lowering the price as soon as competition threatens to move in. Additionally, the costs of reverse engineering a drug are high enough to make this kind of competition very hard. I see no other way than some regulation to at least force some hysteresis or stability on the prices.

The strategy is to prevent other companies from manufacturing the generic by withholding supply from them so as to prevent them demonstrating bioequivalence. ISTM that the least-onerous regulatory solution would be to require manufacturers to provide supply at cost to FDA on demand for testing purposes.

It seems amazing that supply can be clamped down to such an extent that a competitor literally couldn't obtain some samples for bio-equivalence testing, even under a false pretense if necessary.

Completely agree that if someone is willing to pay the list price, they should be guaranteed availability within some reasonable time-frame for testing purposes.

I assume if the only drug line is effectively "shut down" then there's no way to run bio-equivalence and to bring on a new manufacturer they must test some other way? I guess whatever that procedure is, should take effect if the pills can't be ordered for testing.

"Or the government passes a law capping how much you can raise the price of a generic drug over so many years."

Congress, controlled by Rebublicans, right now, won't let government get involved. I don't even want a cap. I would just like governmental over site/approval on Pharmacutical accuisition.

I asked my pharmacist why my generic drug(not orphan drug, noting fancy) is going up in price.

I don't know if she's right, but she told me big Pharmacutical companies are buying out generic drug companies, and raising the prices of the generic drug, or shutting the newly bought company--so they can keep supply down?

I don't know if this is going on, but i've heard it, from at least, two sources. I know it sound extreme, and hard to imagine, but these pharmacutical companies are loaded with cash? Plus, they have government protection--can't buy from Canada, etc.

So, in the end, we are going to be at their mercy?

As to just effecting Insurance Companies, my prescription formulary excludes so many drugs, or makes them difficult to buy; I pay out of pocket. These drug prices are coming out of our pockets.

(It's not just this future bottom boy at some federal correction facility, it's most of these Pharmacutical companies, or hedge funds? I can't tell the difference anymore. Oh yea, Biomarin seems just as shady, but because people don't understand what they do, they seem to just get a pass?)

That's exactly what would happen, but the generics companies can't procure sufficient samples due to the changes in how Daraprim is distributed. So long as Shkreli is able to control distribution tightly enough, there's no worry about a generic coming onto the market.

I don't completely understand how they can effectively prevent generics companies from producing it (even through tightly controlled distribution), but if that's the case, I believe that should be the story here as opposed to the bit about raising prices.

Under normal market conditions, either the demand and price will naturally incentivize generics to enter the market (even at high costs), or this is really not much of a story because the total addressable market is so small that price * demand won't significantly move the needle in the books of insurance companies who will be paying for it. If total addressable market is significant and the producers can manipulate the market in ways outside of patents to abuse monopoly power, then that's the misdeed (in my opinion), not the raising of prices.

In other words, with very few exceptions it's futile to blame a company for their prices. On the other hand, if unscrupulous manipulation of a market is the culprit for unreasonable prices, that's where we should demand/enforce a higher standard.

Or perhaps the story should be about how the drug market is not normal. It is regulated, i.e. ruled, by bureaucratic policy and operating procedures.

Why would they need samples when the chemical structure is so widely known[1]? It's not like it's a biologic where sequence and other formulation details are critically important. Can you explain?

[1] https://en.wikipedia.org/wiki/Pyrimethamine

Edit: I noticed that paulmd, further down, explained why this is important. I didn't realize the rules were this stupid. The FDA should be able to force companies to make their product available for comparison testing. It's insane that it isn't the case.

Formulating the generics isn't the hard part (well, beyond the chemistry but that's straightforward enough - once you know something can be done, it's just a matter of time and effort). Once a generics company does that, they have to perform bioequivalence testing. It makes a lot of sense, because generics can have different inactive ingredients (fillers, etc.) that can still affect the patient.

But in order to perform that testing, they need examples of the brand-name drug to test against. If a manufacturer can prevent them from gaining access to those examples, then the generic is never coming to market. They can't get a doctor to just write up a prescription for somebody, so they have to go through established distribution channels. There are a lot of other, equally nasty ways manufacturers can use to try and forestall generic versions of their drugs. It's not easy to do, because the laws are written to incentivize generic competition, but if a company thinks it's profitable enough to try (and certain factors are in their favor, like with Daraprim), they can.

The FTC has a really interesting document available on their ongoing efforts to fight anti-competitive pharmaceutical practices if you're interested:


So perhaps in these cases we should place the blame on certain shortcomings of the FTC's regulation rather than the companies who take advantage of the loopholes. I don't agree with the practices of this company, but if the loopholes exist, I'm not sure we have much reason to expect companies to behave any way but capitalistically.

Not american but yeah the law enforcement agencies should be more careful about these loophole or at least try to fix them as quickly as possible once they are found out. Maybe there are some other incentives (sometimes) at the top.

But none of that excuses what these guys (I don't have any reasonable word to describe them). Its like saying there was this loophole that makes this kind of murder (not self defense btw.) not punishable by law so I went ahead and killed 50 people. If people dies from these diseases I don't see how it's not fair to put these guys in some murder trail. I wish we had some reliable tools to detect lies and CEOs and PR guys like these had to pass the test before such claims and actions based off such claims (we are trying to make a better drug) could be taken.

As Derek Lowe said recently, biopharma will not be dull as long as Martin Shkreli’s around


If this was done slowly, it could be an extremely effective strategy. Not too different from what Berkshire did with See's Candies.



1. No one dies if they don't get See's Candies

2. There are other chocolates out there

And you can make chocolates in your kitchen with ingredients from a grocery store.

I didn't mean to suggest what he's doing is good. Just that it's a common business strategy and this person applied it in a horrible way.

Most people don't want to get rich slowly, as Charlie Munger says

That's really very different. Berkshire isn't undercutting anybody in price with See's, just getting a premium for a brand name.

That is a fair distinction. I believe the common thing between them is exercising untapped pricing power.

Isn't this one of those very few cases were nationalisation of a company is called for?

When a private actor is exploiting a flaw in the regulatory system, it might be easier to fix that flow or strengthen other parts of the regulatory system (eg perhaps there are remedies in antitrust law), rather than impinging on a property interest because we don't like the outcome.

Here the problem is that other manufacturers can't take up making these drugs at a sensible price because they have to get FDA approval for their copies, and doing that requires test comparisons with the original drug which you propose to copy to ensure that they behave identically. So either we need to change that requirement to a different testing approach (eg proving your copy is good through chemical assay rather than in a clinical trial) or by making licensing contingent on cooperation with regulatory priorities (so if you want to sell your off-patent drug, you have to make samples available to would-be competitors or provide the FDA with samples on request and at cost).

Why do poor business decisions make a case for nationalization?

Price gouging on life-saving pharmaceuticals is not a poor business decision. It's an excellent business decision. But it is also a crime against humanity.

Because we've agreed that the public can't hunt these people down and kill them for this kind of nonsense.

I have re-read your comment a dozen times, trying to grasp what you mean, and come up short each time. Do you mean to say that whenever a business makes a decision that you disagree with, you (or someone else) should feel morally entitled to go a kill the individuals working there? Or do you mean that whenever a business makes a decision that you disagree with, the state is entitled to focibly take the company?

I personally find both to be morally problematic (to say the least), and unless you can establish a viewpoint neutral rule for this new criteria for nationalization (or murder), it will be enforced arbitrarily and capriciously.

would you complain about the state simply setting up a plant to manufacture and distribute a generic version of the drug, thereby driving the predatory company out of business? that seems like it would be an ideal solution that doesn't involve forcibly taking anything away from anyone.

I would have no moral objections to an alternative producer being set up (by the government or anyone else), so long as nobody is forced to buy from either one.

There may be some practical issues (such as the regulator being a member of the same organization as the regulated producer), or issues with the scope (and scope creep) of the project, but those are only related issues.

So you could be in favor of nationalisation, by way of making it common property, of the IP that supports his business, but not nationalisation of the business itself.

The IP that supports the business is already common property. As far as I understand it, the outrage here stems from exactly this fact, that the IP is common property, but they dramatically increased the prices. I am not sure what the reaction would have been if this was a patent-protected drug. Presumably the patent exists to allow for this type of dramatic price change (; though I do not support the current patent system).

I understand that they have currently secured a de-facto exclusive distribution right for the US market from the FDA. Ok, it isn't classic IP, but it has the same effect and as far as I understand it is transferable property, as otherwise this company would not have been able to acquire the rights in this way.

Check out the book The Sociopath Next Door - it talks about how there are so many sociopathic people today because societies used to conveniently do away with them. I'd guess this is similar to what the person is referring to.

>I have re-read your comment a dozen times, trying to grasp what you mean, and come up short each time

Keep trying, don't give up

I have re-read your comment a dozen times, trying to grasp what you mean, and come up short each time. Are you a sociopath?

I am trying to understand what the case for nationalization is in this instance. Is it an arbitrary emotional standard, or a rational viewpoint-neutral standard? I am wary of emotional and viewpoint-dependent standards.

Please also review the Hacker News Guidelines.[1]

>Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity.

When disagreeing, please reply to the argument instead of calling names. E.g. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."

[1] https://news.ycombinator.com/newsguidelines.html

That's like using a nuclear bomb to clear out an ant problem

The masses should make a long term bet and short the company stock if its listed.

He's no different from the other Wall Street thugs. Though he being an outsider may stand out more and make an easier target for NYT compared to his other colleagues.

From an economic and policy perspective, unfortunately, Turing is doing everything right. Makena is probably not a great comparison as its used for prevent early birth, which is something of an edge case for certain pregnant women, versus Daraprim, which is a more common drug. It is the only FDA approved drug for Toxoplasmosis. According to wikipedia: Up to half of the world's population is infected with toxoplasmosis.[8] In the United States about 23% are affected[9] and in some areas of the world this is up to 95%

What no one seems to be discussing here, is why there is such a long approval process from the FDA for generics? Ideally, someone should be able to ramp up production of this quickly, but apparently it takes years just to get the FDA to test your generic, even if its detected in the lab as being 100% chemically identical to the now expired patented drug. Turing is using this lag time to its benefit, but why aren't we yelling at the FDA to move faster on this kind of thing? I guess this might be moot because Turing can simply drop prices to scare off the investors of this hypothetical generic competitor. Say its x amount to launch this and they need to sell at $25 a pill for 10 years to break even. Turing now drops its price to $24 a pill. They're going to have a lot more flexibility here than someone entering the market from scratch and as long as they're selling above the old generic rate, they will continue to make serious money.

Also, from perhaps a less practical POV, considering what the government spends on medicare (3% of our GDP), perhaps it should be building its own generic drug producing plants. Private industry has 20 long years to make profit on patented drugs, but after that it should go into a federal program. This avoid these situations entirely, cut costs, etc. Or regulate prices on generics, or heaven forbid, finally bite the bullet and migrate into a Euro-style socialized medicine/single payer system and be able to bargain with big pharma as one 800lbs gorilla as opposed to hundreds of 6lbs capuchins.

Expecting people seeking profit to "act nice" is asinine. We can insult Shkreli all day but it doesn't change the status quo. Even if he's an outlier, how long is your average white collar criminal case resolution, assuming he's even doing something illegal? 2, 3, 4, or even 5 years? That's a long time for a drug to be off market or be unaffordable to people who need it.

Right now a lot of people are looking at this business plan with envy. In fact, this kind of generic trickery is status quo - see the "reformulations" of generics and then stopping production of that generic. The system is broken if it allows this kind of thing. What we need is a system that's not broken and that can't be gamed this easily. The current regulation model guarantees companies like Turing doing exactly this.

Sadly, online discussions often degenerate into witch-hunts with the assumption that if we stop this one guy, then everything will be fine. I guess its much less emotionally satisfying to discuss systemic political or regulatory issues.

From an economic and policy perspective, unfortunately, Turing is doing everything right.

This is an economically misguided point of view. Free market decision-making can only be argued to be optimal in a free market system, which pharma is not, a distinction which the decision-makers certainly were intelligent enough to understand. Free market mechanisms either need to be put in place, or we need to stop allowing its actors to behave as though it were one. As it stands, even from an economics point of view, this sort of behavior is simply immoral.

It gives economics a bad name when you try to argue that such decision-making is economically defensible. It is never economically optimal to make decisions that can directly lead to the deaths of citizens in the host society, in exchange for higher profits. The reading of free market theory with which most people, including its founder, would agree, is one where the goal is to maximize utility, not wealth. This is a vitally important distinction, and one that the layperson often overlooks. Without it, a free market system becomes nothing more than a war of sociopaths. [1]

Sadly, online discussions often degenerate into witch-hunts with the assumption that if we stop this one guy, then everything will be fine.

It's not sad at all. People are understandably outraged, as it is a natural human reaction to such callous life-and-death decision-making. If you truly believe in your statement, I'd reflect on why you are unable to relate to the majority of people around the internet who are very angry about this.

[1] http://www.investopedia.com/articles/economics/09/adam-smith...

[1] https://en.wikipedia.org/wiki/Enlightened_self-interest

I'm not sure I understand the point about economics being about utility vs. wealth. If its free market then aren't people free to choose between utility vs. wealth and in such case pure free market don't have much defense against a few sciopaths trampling all over the not so sociopaths?

Since all markets are human inventions--there's no "free market" particle--what you're getting at is:

Let's invent a system that makes explicit the choice of dollars over human lives, and let's call that "the free market".

And of course, since freedom is one of those ideas that, in popular use, has been oversimplified to uselessness (e.g. freedom is good, more freedom is more good, without nuance), this "free market" thing sounds like inevitably good--the more freedom, the better, right?

Even if it makes us uncomfortable, how can you say no to the "free market"? Even if, as you yourself seem to acknowledge is vulnerable to sociopathic manipulation, if (some, maybe only a few, maybe even those sociopaths) people want to build a system that normalizes choosing dollars over lives, how can you resist the "free market"?

Easy: it's all human inventions, and I for one don't want sociopaths telling me how to build an economy.

I hate to agree that this sort of manipulation is inevitable in a free market, but I do. It's either that, or broadly, no more cheap #$%^ on Amazon. So what do you pick? Occasional sociopaths or social good at the expense of everything else getting more expensive?

Because assuming the majority loves buying cheap #$@!, this seems like an absolute poster child for the US government to step in and countergame him by directly funding and fast-forwarding new generics. Just announcing such intent ought to be be enough to ruin Martin Shkreli's career, no?

That's easy, I'd pick social good. If I had my way in building a system, I'd absolutely work to make it as least vulnerable to manipulation by sociopaths as possible. Not being a sociopath (and I'm not saying that you are, either), I really can't see a downside to picking social good over lower-cost shit from Amazon.

Building those sociopathic levers in by design? No way.

Ohh I prefer regulation with the hope for honest regulators. I was trying to understand the parents angle.

As for the enlightened self interest its really tricky. Enlightenment isn't easy and if that directly conflicts with his primary job (for business earning money) its much more difficult to address that. Also it forces enormous amount of co-ordination on the side of the customers which is difficult to achieve in every little matter. On the other hand a regulars primary job at least is to think the overall good. Now whether we can choose a proper regular or regulator having a second interest (corruption) is a different matter. The fact that we choose wrong regulator (aka the customers of regular cannot wisely choose even that) only makes me think free market can never be as rosy as some paints it to be.

It's almost never pointed out that Adam Smith, in his free market theory, was arguing for the efficacy of "enlightened" self-interest. I encourage readers to research this aspect of his theory, and how it contrasts with "unenlightened" self-interest. I think most reasonable people would agree that Adam Smith would categorize this CEO's behavior as unenlightened.

The problem is that the economic system that not only allows this, but incentivizes it. Witch hunting isn't going to fix a fundamentally broken economic system. We need to admit that our system is not optimal, and fix it. Rational people are always going to act in their own best self-interest.

I agreed with you up to the last sentence. I see no reason to call rational only wholly selfish behaviour.

That brokenness is entirely dependent on what you mean by self-interest. I recommend reading up on the concept of "enlightened self-interest," which was popular during Adam Smith's era, and theoretically leads to far less "broken" systemic outcomes.

Rational people are always going to act in their own best self-interest.

Well then, we should fix the system by eliminating all people who are less then 100% perfectly rational.

You go first.

>It is never economically optimal to make decisions that can directly lead to the deaths of citizens in the host society, in exchange for higher profits.

When the short term profits are great and the long term costs are too far for you to personally realize... it seems to make great sense.

Now it may not be optimal for society at large, but that doesn't matter when society at large isn't making the decision. For the one choosing, short of laws to punish them and with methods to launder any social guilt, it is economically optimal.

The reading of free market theory with which most people, including its founder, would agree, is one where the goal is to maximize utility, not wealth. This is a vitally important distinction, and one that the layperson often overlooks.

I would argue that human life is not limitless in utility and the free market establishes a price range on it.

Like it or not, there is a price tag on the utility of a human life. If you need to spend 100k per year on drugs to live and you cannot make 100k per year, then the free market has decided that your life is not worth the cost because you are not creating 100k worth of value to trade 100k worth of drugs you are taking out of the market.

I don't think it is reasonable to say that a market in which you arbitrarily decide that a human life has unlimited utlity is a "free" market at all. We can all agree that jacking up the price of a life-saving drug to save more money is despicable, but we would be lying to ourselves if we pretended this wasn't part of the free market.

The sentence "If you need to spend 100k per year on drugs to live and you cannot make 100k per year, then the free market has decided that your life is not worth the cost because you are not creating 100k worth of value to trade 100k worth of drugs you are taking out of the market" is simply not true.

The free market doesn't say anything about the worth of a life being only equal to how much an individual can earn. It says the market price of something is equal to what people are willing to pay for it. We have things like insurance that allow us to have more medical care than we could afford as individuals, and that is completely within the concept of a free market.

I did not mention insurance to simplify the discussion. Why would I bother listing all the possible situations that don't even change the outcome?

Of course you can buy insurance as a sort of reverse lottery to cover your costs. But you paid into that insurance and it is not required to cover everything. The co-pays/insurance can also bankrupt you.

And my main point still stands. If you cannot afford the cost of life saving medication, with or without insurance, then the free market has decided that your life is worth less than the cost of medication.

Saying the free market doesn't put a cost on human life and that it doesn't encourage price gouging is simply false.

I suppose the statement you are latching onto is where I said that it is never economically optimal to allow someone to die in exchange for higher profit, so allow me to clarify.

In this case, it seems nearly impossible to make a concrete case that links this monopolistically-determined price increase to something that comes close to morally justifying the potential loss of human lives.

And as we know, pharma is not a free market in general, and is certainly not in this specific case, so the idea of the free market setting the price on lives seems inapplicable here.

I don't see how pharma is not a free market in this case.

The drug in question isn't even protected by a patent anymore. Other companies are free to create a generic version of it.

Government regulation has nothing to do with this. The free market has everything to do with this. The price of a life saving drug is worth either all your money or however much the seller wants to charge for it, as decided by the free market.

This is a monopoly, which is, by definition, not subject to the price discovery mechanism of the free market.

If you mean that eventually, some sort of force will break up the monopoly and find the true free market price point at the intersection of supply and demand, that is cold comfort to those who may die before that state transition completes.

One of reasons Turing paid $55 million for Daraprim, rather than just produce the chemical compound pyrimethamine, is because it's an approved Medicare drug.

I'm not old enough to use medicare so I don't know the details.

But I am willing to bet that if someone started making a cheaper generic version of Daraprim, it would put on the approved list. The reason pyrimethamine isn't on the list is because no one wanted to make a generic version that hardly anyone uses for $1 per pill.

And even if it wasn't, the drug was being sold for $1 per pill just a few years ago. You can easily pay that without any insurance at all.

If you do some research into this particular medicine, you will see that there are clear, non-free market roadblocks to producing a generic version.

I looked into it and I don't find any.

It is not patented, and no law forces you to only use the brand Daraprim. If someone created a generic replacement, it would be on the fast track to be approved like every other generic.

The synthesis method is even listed publicly.


The only roadblock to a generic version was because no one wanted to compete with $1/pill.

FDA information:



There are no unexpired patents for this product in the Orange Book Database.

There is no unexpired exclusivity for this product.

What do you think it would it reasonably cost to setup a manufacturing line for pyrimethamine and get approval to sell it as a generic in the US?

You keep saying generic. Daraprim is a generic, which has a government instituted monopoly, making it not a subject to free market.

Others could go through the process to be Medicare approved, but that doesn't change that it's not subject to a free market.

I don't think you or ken47 have more than a layman's understanding of the subject.

Daraprim is a brand name. Pyrimethamine is the active ingredient.

When you create a generic, it must be checked that it is roughly equivalent to the approved version. Meaning there are no impurities and you digest the drug about the same rate which is determined mostly by the inactive ingredients. This process is relatively fast, often taking 1 year or less compared to the decades it takes to approve a new drug. And if you are going to be saving medicare millions of dollars, you can bet it is going to be put at the top of their todo list and will probably be tested within days.

To say that this is a government monopoly because you can't sell your drug from day 0 without any testing is quite a stretch.

Right - Exactly. Pharma drugs are granted monopolistic power by the government. Or even duopolistic power. That's exactly what ken47 and I are saying.

To say that a market, which is regulated with government-granted monopolistic or duopolistic power, is a free market is quite a stretch.

It is becoming clear to me that you aren't even bothering to read what I wrote. So this is going to be my last reply.

Generics are extremely easy, cheap, and fast to pass approval.

Needing a minimal amount of time to check that your drug is roughly equivalent to an existing drug is NOT a monopoly.

I did read what you wrote:


>I don't see how pharma is not a free market in this case.

It's a monopoly because it has government-granted monopolistic power. Generics can go through the approval process and be granted similar power, making a duopoly.

That doesn't change the fact that it is a monopoly right now and definitely not a free market. Seems like someone has a case of confirmation bias.

Look around the responses for the notion of controlled access to the drug, and the obstacles it imposes on putting out a generic.

>I'd reflect on why you are unable to relate to the majority of people around the internet who are very angry about this.

The same way I don't relate to the "Obama is a Muslim" narrative on the internet or "9/11 was an inside job" narrative. I think appealing to outrage culture on the internet isn't the bulletproof argument you think it is.

I don't think your examples are sufficiently similar to the subject matter to make this a compelling argument.

Methinks I'm going to HN hell for presenting the disagreement here as a logical fallacy, but:


For I agree with drzaiuslordofthenukedfallenearthgetyourhandsoffmeyourdamneddirtygorilla even though I think I'm not a sociopath. And that's because I also think this is an excellent case for the government to step in and provide the strong parental middle-finger to Martin Shkreli that he deserves so we can still get the free market that does bring so much good and yet also punish the sociopaths who exploit its unavoidable corner cases like this. See Goedel's incompleteness theorem about why, broadly, there will always be corner cases (yeah yeah inconsistent statements in any consistent system, sue me).

See also I prefer Obamacare because all the other attainable alternatives are worse (In the same way I would prefer single-payer like medicare, but unless Bernie Sanders is our next president, we're not getting it).

It's way down there in the article, but Turing's distributor (Impax) is tampering with the generic approval process. They use a controlled distribution strategy where you need to buy it directly from them, and they won't sell it to anyone who uses it for approval testing. Without the namebrand drug, there's no way to prove that your generic is equally efficacious, and thus no generic approvals and no competition.

Wow, this should be illegal. Thanks for pointing it out.

Why can't you just go to a doctor or hospital and pay them a couple grand per pill and use that? Nobody has to know where you got it from...

Because then you don't have an audit trail to use in your study documentation.

I meant the manufacturer doesn't have to know (so they can't take revenge on the doctor/hospital). You can still have a hush-hush audit trail.

Why is the original drug required anyways? Can't you prove it's the same without it? The details are all there in the public patent.

I'm pretty sure that "hush hush" audit trails for drug manufacturers are strictly illegal, would be found out, would bankrupt the company, etc.

Just a guess, I imagine they'd have to go through the whole new drug approval cycle as opposed to the show its bioactivity similar to existing one.

You'd need a prescription to get it. And I don't believe it's legal for a person with the prescription to sell or give prescribed medicine to other other people.

Hire a researcher with toxoplasmosis ;)

Easier said than done, as toxoplasmosis promotes risky behavior of the sort that tends to be incompatible with a research career.

Of course the real problem here is the subversion of the controlled-distribution mechanism to serve a private rather than a public end, a tragedy of the regulatory commons if you like. The basic idea here is good; you don't want drugs like thalidomide being freely prescribed because if they find their way to a pregnant woman consumption is likely to result in horrific birth deformities. This is an abstraction to many Americans because the FDA restricted Thalidomide early, but growing up in Europe I became aware of it from quite a young age because there was a small-but-distinct demographic cohort of people with characteristic deformities.

But what's happening here is the drug manufacturer falsely claiming that there's a serious public health risk in order to get into the controlled-distribution system, and then using that to prevent any potential competitors from entering the market. I imagine that if the FDA had declined to make any of these drugs controlled-distribution then the strategic response would have been to hire a PR firm to plant stories about how the FDA doesn't care about medical vulnerabilities.

I would disagree that many people are looking at this business plan with envy. CEO's of "real" pharma companies know this business model is possible, but no one bothers with it. I think this is partly out of ethical standards (yes, CEO's, even pharma CEO's, can possess this) and partly out of knowing the inevitable backlash makes it not worth it for the business and their personal reputation. Again, while KV isn't a perfect example, their brazenness ultimately bankrupted them, and most of the industry took note. So what you get is a process that only attracts extremely reckless and unethical people like Martin Shkreli, who unfortunately exist in this world. But there demonstrably are not 1,000 other guys trying to take Martin's place, he is an outlier.

Finding ways to make generics super-profitable is definitely common. Turing is, arguably, the ugliest of the bunch, but there's more than enough ugly to go around. Your mythical "honest and kindly pharma CEO who wants nothing but for everyone to have cheap drugs" doesn't exist. Its Shkreli's all the way down:


Bill Moyers: For example, last February, before its patent expired on Namenda, its widely used drug to treat Alzheimer’s, Forest Laboratories announced it would stop selling the existing tablet form in favor of new extended-release capsules called Namenda XR.

The capsules were just a reformulated version of the tablet. But even the minor change prevented pharmacists from substituting generic versions of the tablet.

Result: Higher profits for Forest Labs and higher costs for you and me.

Another technique is for drug companies to continue to aggressively advertise prescription brands long after their 20 year patents have expired, so patients ask their doctors for them. Many doctors will comply.

America is one of few advanced nations that allow direct advertising of prescription drugs.

A fourth tactic is for drug companies to pay the makers of generic drugs to delay their cheaper versions. These so-called “pay-for-delay” agreements generate big profits for both the proprietary manufacturers and the generics. But here again, you and I pay. The tactic costs us an estimated $3.5 billion a year.

Europe doesn’t allow these sorts of payoffs, but they’re legal in the United States because the major drug makers and generics have fought off any legislative attempts to stop them.

America is one of few advanced nations that allow direct advertising of prescription drugs.

To quote some comedian's take on this, 'in my country, your doctor tells you which drugs he wants to prescribe. In America, it's the other way around.' It's astonishing to me that direct-to-consumer pharmaceutical advertising is so rampant here, when somehow we managed to eliminate this for tobacco advertising without causing the 1st amendment to self-destruct. Besides the first-order consequences of medically ignorant consumers besieging their doctors with requests from drugs they can't even pronounce properly, it's also created this bizarre culture where illness is normative and every medical condition has to have a cute nickname or acronym - it can't be long before we start seeing people break up in soap operas because 'I love you...but my hep C isn't compatible with your A-fib!'

"America is one of few advanced nations that allow direct advertising of prescription drugs."

For one, read "the only". New Zealand was the only hold out (due to a trade agreement), but even there it's now been illegal for several years.

> pay the makers of generic drugs to delay their cheaper versions

Is it even legal? Sounds like monopoly-forming conspiracy to me.

>I think this is partly out of ethical standards (yes, CEO's, even pharma CEO's, can possess this)

Not buying it. I'll buy the fallout argument, as that will hurt them monetarily, but I'm not guying them have any moral or ethical concerns with those being hurt by high drug prices.

What's more ethically questionable: spending billions in capital developing drugs to save lives, and trying to make money off that, or spending billions of capital on endeavors like entertainment services that don't save lives at all?

>spending billions in capital developing drugs to save lives

Loaded question. This assumes they are doing it to save lives instead of doing it to make money.

And doing it to make money, given the patent system, is the less ethical option when others would do it to save lives but are now forbidden to do such.

> Loaded question. This assumes they are doing it to save lives instead of doing it to make money.

Not really. It assumes that the drugs save lives. If you pay $X for drug that was developed to save your live or $X for an identical drug that was developed to do a job and turn a profit, it's the same $X and the same drug.

Why people are doing things is generally less important than that they are. This is one of those cases. Demanding a particular mindset when all other things are equal is a little bit silly.

>to save lives

It pretty much does assume it there.

And it does matter because of how one would react. If your end goal is saving lives, you wouldn't spend a lot working for a cure to baldness and you wouldn't buy rights to a drug and then jack up the price just because you could.

OK. Then what do you think is the correct course of action for someone whose goal is to save lives? As opposed to making money, adopting temporarily your implicit contention that the two are opposed.

Preferably a sustainable course of action that allows for future actions to take place. A one-shot is generally useless on any kind of real timescale.

Act like a non-profit instead of a for-profit.

Thank you for your answer.

Who cares why they're doing it--the point is that their money-making endeavors have the effect of saving lives, while other companies spend tons of capital on things that do not have the effect of saving lives.

And who is out there willing to spend billions developing new drugs while giving them away for free? The patent system certainly isn't stopping those people.

> And who is out there willing to spend billions developing new drugs while giving them away for free?



> The patent system certainly isn't stopping those people.

The patent system does prevent people from getting at lower costs. I continue to have hope for countries that invalidate drug patents, and for further methods to be developed to drive down the cost of drug production (so as to reduce the barrier to entry for drug production).

If the patent system doesn't stop the non-profit development of drugs, then the breaking of patents and the pirating of patented drugs should in no way significantly dent pharmaceutical company profits, right?

Has either PATH or the Gates Foundation ever developed a drug? Honest question here, I just don't know?


It's from 2011, a quick search didn't find a more current report:

"After collecting data on indicators, PATH project teams use an online tool to enter results, which are aggregated by phase of development. A team developing a malaria vaccine, for example, reports completion of clinical trials with children in Mozambique. This result is aggregated with data from other teams conducting clinical trials of other products.

Top-level 2011 findings include the following:

PATH had 199 technologies and products in our development pipeline in 2011. Fifty-one products moved forward one or more phases in the pipeline. Six products were registered, three were licensed, and two were prequalified by the World Health Organization.

PATH had activities in 68 developing countries. We trained more than 91,000 people in 2011 and worked on 101 policies, strategies, and guidelines. At the global level, eight guidelines and one strategy supported by PATH’s work were approved by global decision-making bodies. At the national level, 36 policies, strategies, and guidelines supported by PATH’s work were approved. More than 74.5 million people benefitted from PATH’s work. More than $100 million in funding was mobilized to scale up PATH-championed interventions. PATH was awarded 83 grants valued at nearly $160 million."

Regarding the Gates Foundation, they don't directly research drugs, but contribute heavily to those working on polio, malaria, and HIV.

When J&J sells an antipsychotic with bad side-effects for off-label uses in contravention of an order not to, that's worth about 100,000 Justin Biebers.

You know better than that. Have some more coffee.

Don't do that, that's a cop-out. Please answer the question directly. And, it's really not clear if everyone "knows better than that". Clearly state what is the "better" explanation (seriously, I'd love to hear the explanation), don't suggest he needs coffee or whatever -- that adds absolutely nothing of value to the conversation.

I don't know who you are, but my reaction is that a comment like this shouldn't be stated in the exact tone you've chosen/reacted with. (I looked through your past few comments, and a lot of them are the same way - "There is no shortage of scammy software companies like AVG, but what always cracked me up about AVG was their logo.")

I like the fact that HN is a particularly civil place - it's in the guidelines. Now granted, AVG or Martin Shkreli aren't a member of the HN community in a very narrow sense (though I'm sure AVG engineers read it), unlike a startup founder. But I would appreciate it if you would hedge your statements, lead with the facts, and make them subjective.

It may sound like reserved understatement if you do so, but people here know how to read between the lines. I don't object to any of the facts you've presented, in fact your view is appreciated here, and you don't have to be "neutral", you're not Wikipedia.

I just wish you would take a moment and phrase it more carefully. HN has a rule, no gratuitious negativity, and civil discourse. (Again I'd like to emphasize that I enjoyed reading your take and the facts you've presented.)

EDIT: This comment is now at -4. I'm sorry, downvoters are not following HN policy. "Simply put, Martin is a sociopathic criminal with a well-established, and consistent track record of deceit, recklessness, failure, and just plain old stupidity" without references, and "In all my years of investing, he is one of the most unique scumbags I've ever come across" is extremely inflammatory. As you can see from the number of replies that it has generated. We don't need to make HN reddit.

The facts speak for themselves - when they're presented.

I didn't downvote but I do disagree with you. It's a blunt opinion, but one supported by reference to the article and to the cited litigation, from someone with meaningful perspective as a professional investor - in the same way I'd be OK with a professional crypto researcher saying 'Product X is blatantly insecure, and Software Company Y is dishonest when it claims otherwise,' or any number of other contexts.

I'm with you on thinking one should be diplomatic most of the time absent full possession of the facts, but I don't think one should hedge one's personal experience as long as its appropriately qualified. In this case I saw an unusually blunt opinion, but one formed with additional information that I don't have access to. I don't take the opinion at face value, but it expands the scope of the discussion with additional data rather than being purely a reaction to the NYT article, not least because the author of the opinion is signaling a willingness to risk reputational damage by making such blunt statements.

I have absolutely no objection to the opinion and said about three times that I was glad to have read it. The exact same opinion can be worded in different ways. It's not about being diplomatic, it's about being informative versus inflammatory.

If you try to read it literally what does "one of the most unique scumbags I've ever come across" mean exactly? It's not possible to translate this into an informative statement - it contains too little information, and "one of the most unique" is not even an oxymoron, it just has no informative content. (Some people consider "most unique" to be a grammatical error.)

So if it's a reflection of the author's emotions, it should be stated in those terms. But if the author takes a moment, he (or she) can make it far more informative. This isn't reddit.

I found it meaningful insofar as the the poster was locating the subject far out on the tail of a normal distribution, and I've had enough contact with the hedge fund world to have a sense of the distribution in question (and how people express themselves in that social context). I do see your point but I guess we have different communication styles as I found the use of language more informative than inflammatory. De gustibus, non est disputandem.

It should be pretty obvious by now that the pharma sector is completely out of control. Again and again I read about the rising cost of healthcare, how we can't afford to support an aging society, and now even "solved" problems are used to squeeze even more profits from those who can afford the least.

And I'm not talking about the US, this is a world wide problem. Instead of making international treaties that make enforcing medical patents even easier, we should be talking about making the medicines we have more accessible. I don't want to live in a world were only a fortunate elite has access to modern treatments, but it looks like that's the way we're going.

pyrimethamine (the generic name) is listed several times in WHO's list of essential medicines.


It's not a huge list of medicine. It would seem to be reasonable to allow people to make and sell the meds on this list for profit, without allowing them to engage in the scumbag behaviour submitted article talks about.

Yet people are still quick to say "...but what about Big Pharma?" when there's a discussion about abolishing patents.

I don't know if patents should be abolished completely, but if there's a discussion about a serious patent reform, we should stop considering pharmaceuticals as some kind of exception, and apply the new reform equally to everyone, instead of allowing exceptions for Big Pharma, or worse, watering down reforms to protect Big Pharma.


I don't understand why everybody's so afraid that without patents no medicine would be made anymore. On the contrary, it would force companies to work together and share the R&D, and would prevent the current inefficiency of multiple companies inventing the same wheel, doing the same studies, just because they all want to invent this medicine first.

Even better: with all the money that would be saved from not having all the bureaucracy around patents, governments could even set up their own research facilities and share all their findings with the public, making affordable and better medicine available for all mankind.

That's a bit of a fantasy, isn't it? Pharma companies don't re-invent the same wheel: even in cases where they're pursuing similar avenues of research, the drugs being developed share sometimes significant differences (and in many cases, even insignificant differences can later be found to be more significant than first believed). Even if companies were somehow able to collaborate without any problem, the end result would be a decrease in the number of medications brought to market. Instead of multiple therapies that doctors can use to tailor to their individual patients, they'll get one that works for the majority of cases and woe be to anyone who falls outside the bell curve. The developing crisis with antibiotic-resistant strains is a perfect example of the sort of problems that arise from such short-sightedness.

But that's a scenario based on your idea being feasible. The far more likely scenario is an even more brutal and unethical market, where companies use controlled distribution (such as with Daraprim) to prevent generics from being tested, and thus, being brought to market. Why? Because without patents, even that limited initial window for drug companies to earn back R&D costs--along with supporting the sunk R&D costs wrapped up in the larger number of drugs the fail to bring to market--exists only so long as the manufacturer is able to use whatever force is available to it it to stop generics from being produced. Far from cooperating with one another, pharmaceutical companies would have every additional incentive to stab each other in the back. Instead of skirmishes like you have now, you'd have a war to the knife.

It's easy to look at problems with the current patent system and think that they'd all magically be fixed by getting rid of them. But unintended consequences are still consequences.

Every way of dealing with something has its flaws, the point is to fix them. The patent system is flawed in its foundation, i.e. claiming a discovery for yourself and keeping this technology away from the rest of humanity.

For the rest, I wouldn't know why there wouldn't be multiple medicines. Labs would still come up with multiple compounds that have more or less the same result, and if not, research would continue for the people who fall outside the bell curve of the other medicine.

The whole difference would be that instead of competition, there is cooperation, and the aim is not to make money or profit, but to help humanity. This is not unrealistic, it's basically what we (at least in NL) learn in primary school: "Two know more than one", "Many hands make light work", etc. It's only that the schools after that tell us to forget it all and teach us how we need to compete each other and especially to keep everything for ourselves and never do anything without expecting something in return.

[quote]where companies use controlled distribution (such as with Daraprim) to prevent generics from being tested, and thus, being brought to market. [/quote]

This wouldn't happen, as the resulting medicine IS the generic.

> For the rest, I wouldn't know why there wouldn't be multiple medicines. Labs would still come up with multiple compounds that have more or less the same result, and if not, research would continue for the people who fall outside the bell curve of the other medicine.

The issue is that this process happens right now because of independent development due to competition. As soon as you unify multiple efforts into one cooperative effort, you no longer have multiple efforts that produce multiple viable drugs.

You're appealing to unify research efforts to put more wood behind fewer arrows to help people. And that's fine. It just that this has consequences, not all of which would likely be ones you want.

So, yes, the resulting medicine would BE the generic. And that's great! But there is a drawback. And these are just the consequences we can easily predict. We haven't even thought about the psychological effects of enforced monoculture yet.

That's a nice worldview, but it is predicated on the assumption that people are basically good, as suggested by Rousseau. Many of us adhere to a more gloomy philosophy as suggested by Hobbes, that people are more likely than not to be selfish assholes given the opportunity (as demonstrated by the subject of the story). From a game-theoretic point of view, you need a strategy for dealing with defectors, just as in nature plants and animals need to evolve responses to parasitism or suffer the consequences. Symbiotic/cooperative mechanisms which are mutually beneficial can emerge in nature and in markets, but it's by no means a sure thing that they will in any given instance.

It deeply concerns me that so many people fundamentally misunderstand the point of patents. The point isn't to grant ownership over tech simply for being the first to file.

Patents, as originally intended, are to encourage documenting the invention and the eventual transfer of this knowledge to the public sector. They were never intended to be abused and twisted for personal gain as they are today.

Your problem aren't patents. Pharmaceutical patents exist all over the world, including in countries with mandatory general public healthcare (i.e. pretty much all of the developed world except the US). The problem is the lack of oversight on prescribed medicine and medical services. Patents are a government mandated monopoly. That's fine, as long as government also mandates and/or negotiates prices as a condition bound to the patent. It seems so obvious, I kind of feel bad to spell out such a trivial interrelationship.

Patent reform is just going to be a way for those in power to promote regulatory capture. The only reform worth anything would be abolishment.

Well, big pharma still does R&D, and they will continue to do so if they think they can keep producing drugs cheaper than an acquisition (which they are working toward).

This is all due to IP laws, I really hope that countries like china and india stay strong on their position of "Fuck IP Laws".

It does look like we are entering an age of 'trickle down medicine'. Sad to see after such humanitarian improvements in the West post-WW2. Even Places with great universal healthcare like Australia and UK are increasingly looking to privatise. This blows my mind as we can look at the US to see where this direction will take the system.

I used to work for a generics manufacturer, and indeed this was their MO. Seek out old drugs that sill have a very viable market but are under the radar of the big guys, undersell until they're the only supplier left, then jack up the price when patients have no choice. It's despicable and seems inevitable with the current regulation model.

At least in the US, that actually sounds like it's already illegal from general business regulation. As in, no new laws needed, get the ones we have enforced. Wouldn't be surprised you can already pierce the corporate veil without new laws too.

This is not specifically in reply to the parent, but the point fits here: I'd observe that calling for more regulation or even outright nationalization to fix this, when it's probably already illegal, is not thinking very clearly. Regulations are already failing to prevent this... how is enacting more things that make illegal things illegalier going to actually solve the problem? How is doing the same, but more, actually going to help?

Perhaps not more, but faster and perhaps more thoroughly in order to change the player's risk assessment.

By the time these companies are called out they amass huge war chests and tie these things up in the courts for years while enriching their investors and management teams.

Then, when the hammer falls, that company disintegrates on some level and, often, these management teams spread to similar companies and do it all over again.

Obviously, something is not working. When something is not working the answer is almost never 'let's keep things the same and hope it turns out better.'

My point is "Let's write more regulations" is "let's keep things the same and hope it turns out better".

It's easy to call for more regulations but it sounds a lot more to me like the core problem is a priority mismatch in enforcement. A lot harder to fix, but certainly step one seems to me to be to get people to stop calling for "more" regulation and start calling for the core problem of ineffective regulatory agencies to be addressed. Betcha if you took a look at what the relevant agencies were doing with their time instead of dealing with this, you'd be less than pleased.

I've seen these kinds of things up close (investigations and eventual prosecutions of exploitative companies in the health care sector) and I can absolutely tell you I am not pleased.

But I also don't see the alternative. I don't think a free market approach would work. The government has a huge standing war chest. It can afford to take the time and expense to go after these bad actors. Even insurance companies are rightfully reluctant to take on very expensive, risky litigation and/or investigation that could run into multiple years or even decades.

The market is a wonderful tool, but it can't solve all problems. Some problems are so big that it takes the pooled resources of, essentially, everyone to fight against it.

I didn't say anything about a free market. I said, go fix the regulating agencies. Way harder.

I'm a libertarian, but I'm not an "anarchist" because I still think it makes more sense to have an industry, and an independent, focused, effective regulatory apparatus. When you fall prey to the regulatory apparatus' ploy to gain more power with yet more "regulations" by responding to their failures to use existing regulations to fix problems, you A: play a part in letting these sorts of failures slip by B: reward the regulatory apparatus' failures, creating more incentives for them to fail later and C: give them another vector to "fail" and need "more power" to fix their failures in the future.

You want regulations to work, stop falling for this obvious ploy and start holding your government servants responsible for the failures they are already abundantly equipped with the tools to solve, instead of playing the sap and joining in with the voices calling for more power, exactly as they want. They've got enough to handle this problem. Go take them to task, don't hand them more power even as they are demonstrating their manifold inadequacy to be given even what they have.

Looks like the DOJ is very probably looking into antitrust violations in the generic drug industry: http://www.troutmansanders.com/the-dojs-generic-drug-antitru...

We'll see if any of this survives our current President's tenure, though.

It seems unlikely that the DOJ will continue this into the next administration, it has become increasingly politicized throughout this one (and arguably over the last 40 years or even longer). Perhaps every agency faces an unavoidable politicization if it survives long enough, and since they are never abolished or fundamentally restructured, they will all eventually fall victim to it.

> undersell until they're the only supplier left

I don't think this is illegal unless they're selling the drug below cost (dumping).

IANAL, but I do know 2/3rds of the company existed entirely to push the papers that kept the place running above the boards, along with yearly inspections by the FDA, etc. Whether this is a problem of regulation or enforcement can't be discerned by me, but my simplistic understanding of it was

( cost of entry to market + stringent packaging requirements for these particular drugs ) / market = nobody else bothers to get in the game

Tammer : If you wrote an article about your experience, I'd love to read it.

But what is preventing a different generics manufacturer to enter the market at that point? How long can an exploit like that go on?

The cost to setup a process and maintain it according to FDA requirements.

The market size is likely just under the cost to establish the manufacturing capacity for the US market.

I guess that maintaining the process isn't that expensive, considering the previous price (which, I'm pretty sure, wasn't kept at a loss).

So, probably, it's setting the process up which is expensive.

And yet the "bad guy" generic manufacturer was able to raise the capital to do this (and presumably make a profit). What's the difference?

Turing only acquired the US marketing rights. Someone else is making the drug. So that doesn't change the FDA licensing, but they get to increase the price in the US.


Why don't the other suppliers jump back in when the price gets jacked up?

Well, in german there is one word describing how to calculate something like this: "Leidensdruckanalyse".

It's a dark word, because it basically means: Why give people drugs for $13.50 if the disease is horrible enough that they will, in the long run, accept $750 to ease the pain or to not die.

We have laws preventing something like this, but then the industry just has to invent a "new" drug (basically the old one with a little difference in formula), sell it at a higher price and then discontinue the old drug.

Sad world, we live in.

You may view it as sad.

But I think two things are happening: 1. The price of the drug was artificially deflated. 2. The somewhat-free market is deciding how to handle the correction.

If the market for this drug was interfered with and the price was not allowed to go up, who's to say the manufacturer couldn't just discontinue the product? Would that help?

I have to tell you that free-market cannot be applied to every market. It doesn't work in education system and it certainly should not work in the health system. Of course nobody wants to die, and people would theoretically be willing to pay as much as possible to have a drug they need to survive. That doesn't mean that this drug has to have an extremely elevated price or not being produced at all if its non profitable. We are not talking about the new iphone here, but about drugs that people need to stay alive.

In large the drug market is inflated, not deflated, because so many consumers don't pay anywhere close to sticker price out of pocket. Accordingly, one has to be careful in ascribing typical free market motives to either supply or demand side actors. In this case, I think that with such price hikes, one would expect a further than observed decline in demand. We don't see this because so much of the consumer side is completely insensitive to price. Essentially more than half of the market spends as if they were multi-millionaires, and Turing is arbitraging this market inefficiency. I really think that typical free market mechanisms are completely overwhelmed in this case.

Therefore it's impossible to say whether the long tail drugs that Turing is marketing would be considered under-priced in a free market. We can only say that in the current consumer-price-sensitivity short circuited market that the large pharma companies think that there are more profitable areas to put their energy than long tail drugs. And looking at it from their perspective, this seems fairly obvious. First off, these drugs represent a small part of the market. Also, even if they do covet Turing's margins, competing with Turing would diffuse the monopoly mechanism that enables Turing to secure these margins. The Nash equilibrium then would seem to be not to bother.

I don't want "free market economics" applied to the pain and suffering of someone I love, especially if they're not independently wealthy. At what point does the happiness and wellbeing of people you care for outweigh someone ramping up their revenue stream in the name of capitalism?

Best satire on this thread.

That headline is just clickbait. It is available from Indian generic manufacturers for around 2 rupees a tablet. That is about 3 cents a tablet.

India makes 80% of the generic drugs used around the world.

If US hospital administrators are paying $750 a tablet, it sounds like the Indians have not bothered to apply for sales approval in the USA due to the low profit margin.

There is no generic approved in the US, at least. You can search ANDAs here: https://www.accessdata.fda.gov/scripts/cder/drugsatfda/index....

There is a little more user-friendly info here: http://www.drugs.com/availability/generic-daraprim.html

This is insane. But then again; the whole pharmaceuticals business is insane. Why again do we have a problem with antibiotics resistant bacteria? Because we stopped researching antibiotics in the 1970, because antibiotics weren't profitable anymore. (That, and the practice to feed antibiotics to our livestock to enhance growth, I guess.)

Research and trials shouldn't be done by the companies. Instead it should be done by the state, then companies should be able to bid on an exclusive contract to manufacture and sell the drug. The company that offers the lowest selling price gets the contract. After the exclusive period, it becomes a generic licensed drug, license feeds sponsor new research.

Don't know if that would work, but the current system is simply homicidal.

These guys are making a profit from people's sickness and desperation. I found it distasteful to place making a profit above the mission of providing health care. Market driven economy is blind to other concerns and only listens to money.

I agree but a somewhat less ambitious and still workable idea would be to have post-patent stuff like this manufactured by a state entity or by a private one with state support.

Again, the end result is a decrease in the number of drug therapies available to doctors. Instead of multiple options, where one can be selected that best fits an individual patient, you'd have one. If that therapy works for the patient, fine. If it doesn't, if that patient fits outside the bell curve or stops responding to it (as is very, very common across a wide number of therapies), then that patient is screwed. And often, dead.

Just look at antidepressants, where doctors have to slog through a huge number of different options (not just different classes, like SSRIs or SNRIs, but often radically different drugs within those classes) to find the right drug therapy that works for each individual patient. Choosing the right medication, and the right dose (which can have a huge effect on how the drug functions) can mean the difference between someone living a healthy, productive life and suicide.

Drug R&D is an entirely different ballgame than basic science. And there's already countless examples of how basic science funding, from appropriations to attempts by politicians to interfere with the grants process, can be screwed up. Hell, just the amount of funding necessary to replace private drug R&D would be a significant political expenditure. And here's a fun consequence: how long will it be until some arrogant politician comes along and complains about how drugs developed with American taxpayer dollars are being provided to foreign countries? I can see it now, and it's terrifying: some bullshit slogan like "American drugs for Americans" should terrify you, too.

Even under the best case scenario, public funding would mean tradeoffs: research option A or option B, but not both if there's any overlap. And that's before politicians start playing games and before budget cuts start impacting research. Maybe the solution is to have manufacturer bids be sufficient to cover those R&D costs? Congratulations, you're right back where you started, with drug costs either the same or negligibly less. And where does the money go? If it goes into the state's general funds, politicians will use that money for their own special interests and pet projects. If it goes into an earmarked fund, politicians will cut back taxpayer funding by an equal or greater amount. You can see textbook examples of each with federal infrastructure funds and education funding in states that host lotteries "for the children."

Simple idea in theory, horrible in practice. Unintended consequences are still consequences.

As for antibiotics, that's a bit of a different case. There are a lot more arguments for public funding in these sorts of circumstances, where pharmaceutical companies can't research and bring a drug to specific, niche markets. Antibiotics are a classic example, especially when you consider the broader public health risks associated with the rise in antibiotic-resistant strains.

Interview with Shkreli about this price increase: http://www.bloomberg.com/news/videos/2015-09-21/why-turing-i...

I encourage everyone to watch this...maybe it's all bs but among the interesting points Shkreli says:

-They have reduced or eliminated co-pays so no patient is paying as much out of pocket as they used to

-The drug is still 50% given away to people who cannot afford it

-The company ships drugs to patients before resolving disputes with insurance providers

-Shkreli's view is that it is in the best long term interests of the public to have a drug that can be insanely profitable be insanely profitable because it creates an incentive to create another better drug

-On that line, the company is researching new alternatives to the drug which are less toxic (ie: cannabalizing its own market)

They're trying to fleece insurance companies. Guess who pays for that? Save your $25 copay, you'll need it to pay your 40% (low end) year-over-year premium increases.

An alternative interpretation is that Shkreli is a sociopath (other evidence of that) who's try to exploit people with no choice, and he's giving some hard to verify excuses to deflect criticism.

Maybe they will create a new drug with the extra money, but there is no reason to believe a generic drug manufacturer has anything in the way of research capability to do so. There is no reason to view this as anything but bullshit.

He had the company switch over to direct sales, which explains most every other point.

The only thing to note here is that they raised the price 5000% for a drug from the 40s.

The same thing happened with ACTH, a hormone around since the 50s. [1]

It worked; the company with few economic prospects ended up being sold for $5.6 billion [2]

1. http://www.nytimes.com/2012/12/30/business/questcor-finds-pr...

2. http://www.wsj.com/articles/SB100014240527023046401045794870...

Oddly enough, I think the story buries the lede. Near the bottom, refers both to the fact that distribution of the drug very recently became controlled and that Shkreli -- now owner of the drug -- has previously talked about controlled distribution "as a way to thwart generics."

Prima facie evidence of monopolist behaviour?

Drug creation needs to be nationalized, 100% tax funded all the way from researcher to trials to manufacture, and the drugs sold at cost thereafter.

And the pharmaceuticals industry needs to just go away.

No, this will just make a bad problem worse. Overreaction in the extreme.

There may be a need to look at enforcing some more openness to formulas and manufacturing process so that after patents expire it's less possible to maintain an exclusive on a generic. That is consistent with the intent of patent protection and encourages open markets and competition.

The Pharma industry does need to be relatively strictly regulated - for instance see the issues over withholding and bias in clinical research:


But, nationalizing the industry is impossible. We don't spend anywhere near enough on medical research for it to be possible. The UK government for instance spends about £500m a year on all medical research, even if you redirected all that money into clinical trials, you would be lucky to produce a handful of drugs each year.

Why would you assume that in a situation where the entire pharmaceutical industry was nationalized there would not be any more revenue going to those programs? Presumably 1) a government who chose to nationalize them would also direct more tax dollars toward them 2) at least some of the revenue pharmaceutical companies are seeing now would go to government manufacturers instead.

This is academic, perhaps, given the likelihood of it happening.

Honestly I think single payer healthcare in the US gets you 95% of the way there. At that point the government is in control of most of the revenue to the pharmaceutical companies leaving them in a much better negotiating position. It even makes sense to then bring some of the pharmaceutical production "in house" to cut costs since you're de facto paying for all of the pharmaceutical research anyway.

Medicare would even be in a pretty good negotiating position now if it weren't barred by statute from doing negotiations.

Mind boggling, this. There's zero rational explanation other than government-sponsored profiteering, and yet still this is a thing.

I, for one, would not at all like it to be subject to government shut downs, annual budget cuts to pay for wars, etc.

It's really shocking to such an anti-technological development comment on site about technological development.

If the federal government had locked down all IT development in the 1980s as you proposing they do for pharmaceuticals, we wouldn't have this forum to comment on, much less the industry it is built around.

It's anti-corporate not anti-technological, not quite the same thing. After all the open and free Internet is the creation of government departments and government-funded universities.

I don't believe that anything as extreme as the parent suggests is necessary but I do believe that we should have enforceable transparency in the pharmaceuticals industry R&D costs and/or decoupling the drug trials system so that the trials have to be carried out by an independent third party.

>It's anti-corporate not anti-technological, not quite the same thing. After all the open and free Internet is the creation of government departments and government-funded universities.

The only thing that made it useful though was commercialization.

Imagine all the for-profit stuff on the internet went away. The remainder would still be one of the most useful things ever created by humanity.

>After all the open and free Internet

Yes, the dumb pipes of internet are.

The applications, like this website, that actually make use of those dumb pipes are not.

It really isn't comparable.

Computers are tools. Drugs are health. They are a public good and a natural human right. Holding people's health hostage is unacceptable whether you do it with a knife in an alley, or a capitalist health system.

Mixing them up like the USA system does is a category error.

They are a public good and a natural human right.

No they aren't. Saying that is equivalent to saying that you would be justified in putting a gun to a chemist's head and forcing him to make a drug for you even if he didn't want to. But there's no reason to say that your "right" to a drug trumps his right to be free from threat of violence and denial of agency.

What you're talking about is more of an entitlement than a right.

Holding people's health hostage is unacceptable whether you do it with a knife in an alley, or a capitalist health system.

Why exactly should I feel like society owes me health care that I can't pay for? Especially when the model involves a scenario where my getting health-care possibly involves using violence, or threat of violence, to make somebody else provide that care? How is that ethical?

Yeah, yeah, I've read Ayn Rand too, but she's wrong.

Even from a selfish perspective, public health is so crammed with positive externalities it pays for itself.

Nobody's going to force chemists to make drugs. Instead the way tax works is that you force everyone to pay a fraction of their productivity into a fund that gets spent paying the chemist to make drugs, the pharmacist to deliver them, etc. It's very similar to insurance except that it doesn't have the perverse motivation to deny you care, and it's compulsory because a civilized society values people not writhing in pain and dying from uncured curable disease more highly than losing a fraction of their time working for the state to prevent it.

Judging from most of my Facebook feed, it feels like a lot of people in this country do not value that more highly than miniscule taxes.

They are directly comparable. New drugs don't materialize out of thin air any more than the iPhones or any other applications of basic internet protocols did.

Imagine if in the early 90s we had stiffed cellular phone technology because "only the rich have access to it" or general internet/network technology because "only banks and giant corporations have access to it."

Thanks to capitalism, the technology is now so permeates all sectors of society that some have argued that access it that internet access and smart phones are a human right that should be socialized by the government.

New drugs come from universities, and from people motivated by the combination of public-spiritedness and academic success.

Tax would pay their grants, tax would fund the trials, and tax would fund the production and packaging.

Do roads and public water sanitation materialize out of thin air?

> New drugs come from universities, and from people motivated by the combination of public-spiritedness and academic success.

Ahh, hmm, I'm wanting to ask if you know anyone working on drugs without sounding rude.

In my experience they are like doctors. Lilly researchers do enjoy the thought of helping people, but mostly in the abstract. In the concrete they like complaining about people and regulation :) they also very much like living the "good life".

I'm not saying we'd lose all drug researchers if it were nationalized, but I do think we'd lose a lot of them -- at the end of the day, most people do want money, and end up being motivated to pursue careers which are financially rewarded. A full time doctors without borders just wouldn't work IMO.

As to the claim that drugs come from universities... You can take an interesting research finding and turn it into a potential drug... but there's a tremendous amount of work remaining, which isn't particularly interesting / researchy, and still requires someone very smart to do it. Essentially the more financially motivated people in academia are the ones who volunteer for what is often a fool's errand (a failed drug). I think the "new drugs come from universities" position is also true in the sense that "biologists get degrees from university" -- but as others pointed out, that sense is true for all industries.

I'm confused why would think that roads (a basic network utility) are comparable to IT applications that use use a basic network utility. IT applications are to the internet what food delivery, personal transportation or freight transportation are to roads.

Researching drugs or developing IT applications are not basic commodities.

Drugs are a complex good created through the intensive efforts of highly intelligent, trained human beings. They are anything but a natural right.

That is absolutely true, and is also true of clean drinking water, sewage treatment and security of the person. We can choose to make these things available by our common efforts.

That is a bad comparison. It makes no sense to have competition for water. Network effects matter.

Pharma research does not have network effects

And who is going to be in charge of them? Will they not become corrupt? That's a rhetorical question, of course.

When they do get corrupt what do we do, since it's the same guys with the guns and court houses?

Is there clean drinking water in your house? Did you pay insane amounts for it? Do you live in fear of oppression by the water company?

There are some very messed-up public works, but most of the time it works pretty well.

I'm not trying to be rude, but I can't fathom how you can think running a public utility like water treatment and capital intensive research and development are in anyway comparable to each other.

Water works represent an enormous public investment in R&D over hundreds of years. They didn't and don't invent themselves. It's an engineering triumph that they feel so routine.

To return this to drug companies, what you are suggesting is a nationalized manufacturing of drugs, not a nationalized R&D of drugs.

FWIW unlike 90% of this thread, this suggestion doesn't sound insane to me. We could look at the number of people with a disease, and the QALY swing caused by the treatment, and then pay the team which designed the drug for the patent for (expected number of treatments) * (expected gains in QALYs).

This would allow the drugs to be any price the government liked once created, but still convince financially motivated smart people to work in medicine. Bonus points if the solution included ever-rising-prices for long untreated diseases (kind of like an auction).

Water treatment is private where I am. Some places in the country it's (still) government ruled. They are on a regimen every other month it seems. Also the streets turn into rivers when it rains heavily. Oh... and their bills are higher too.

Replace drug with aircraft and few people will say the military should be private.

You can believe that the government should provision military defense and still find laughable the claim that one "deserves" a sophisticated fighter jet flying overhead.

Having a credible level of deturance might not need cutting edge aircraft, but things have progressed past the point where pointed sticks are sufficent so some form of flight capability is required.

Your solution would stop innovation in any industry

Innovation happens because people are curious and want to make their (or other's) lives easier, this has nothing to do with patents, or if it's private or government run.

Want to see real innovation? See for example the home made radio receivers people made in WWII, that fit in a small tin can, or visit an Amish settlement (http://kk.org/thetechnium/amish-hackers-a/). Not to mention hacker/maker spaces and fablabs, which all work on open source principles and sustain themselves through donations or member fees.

Yes and no. Many kinds of innovation happen because people are curious... provided they can afford to indulge their curiosity. Of course, I don't know many people who can personally afford to do the kind of research they are employed to do, so there are important limits at work. Funding plays a major role in enabling curiosity.

That said, there's also application. Curiosity may lead to someone discovering a particular complex chemical, but curiosity won't turn it into a cheaply produced pill available at your corner pharmacy.

Anecdotes aside, they still require massive amounts of capital in order to create useful applications.

Hobbyists tinkering in a hanger did not create modern airlines - giant corporations like Boeing managed the capital required to make it happen.

Hobbyists tinkering in a garage are not going to be able to carry out years of dedicated research followed by years of study followed by years of clinical trials.

Because innovation cannot exist outside a purely market driven system?

Improving things just to improve them and research just for curiosity's sake are foreign concepts to those running the markets.

To be fair, they are foreign concepts to a lot of people in general.

"Drugs are health."

Only a sick (person/group/society/culture) would link them like this. Drugs are, in fact, dis-ease. They are the opposite of health.

Real food, real exercise, real work and real sleep. That's health. Drugs are at best dis-ease and at worst tools of predation and exploitation.

Why don't you come back and sing that tune when you're old.

Presumably I will be in a state of dis-ease ... I will be sick in one or more ways.

You're making my point for me.

Pretending someone who disagrees with you is arguing your point is... pretty dumb, to be frank. Or did you think I would just get unbearably confused by your cartoonish switcheroo?

I'd be happy if Big Pharma had to play on the same field as us. But as it is now, they reap huge amounts of cash from NIH and other public entities for research. Of course, the profits are all privatized.

For 20+ years, they've been moving more and more of their R&D and manufacturing overseas to save on labor costs. They then get Congress to approve of anti-competitive laws that disallow citizens from importing cheaper drugs from overseas for both use and resale. Big Pharma should have to compete on the same level as labor.

The comparison is specious. People die when drug development fails, is too expensive, or is done too slowly (or not at all.)

From what I've heard, the cost of research is already heavily nationalized via the NIH and other grants.

In typical US fashion, though, the profits are privatized.

Actually, I don't believe letting the government take over would be good in the long run. The most direct fix would be to immediately revoke the various laws that disallow American citizens and companies from buying approved drugs in foreign markets at massively reduced prices and then reselling them in the US.

Big pharma has for years now been slashing their US workforce and moving to third world countries. Another example of labor getting to compete in the global market, while capital enjoys privileged advantages.

I want my goverment helping people avoid health issues, rather than subsidising costs that could have been prevented. I've yet to see any one industry that has been nationalised and is performing better (in every sense) than the private sector.

Except for socialized health care?


And roads, electricity, emergency services, internet service...

> performing better (in every sense)

Oh, I see, you didn't really want a fair comparison. No matter how far you separate the means of two gaussians their tails will always overlap, and therefore you are tautologically correct. I'll try to remember that next time I go to pay 2x what I would pay in a contemporary social system for health insurance, I'm sure it will make me feel better.

I don't think you understood my comment.

"Socialised healthcare" is a system where a public institution puts capital to take care of a patient by using private-made products and services. i.e. the needles, IT systems, ambulances, drugs, etc, the public system is a platform, but not an industry.

Let the market be free, private companies are better at solving real problems. If the price of a drug is expensive (i) a public health system will take care of it, and (ii) new players will want a slice of that expensive drug by making one better and cheaper. This is my point. Governments are not good at making realiable and quality products and services.

Loads of things have been handed over from the government to companies within The Netherlands. Your general statement that governments are not good I highly doubt. Especially for basic services, governments seem to run them cheaper and more reliably.

Well, in the US, we have the Veterans Administration and Indian Health Service doing a poor job and wasting a lot of money and are unreliable.

Part of that failure is political. People don't want them to work because they prefer markets do it.

A great example of this in action is the silly Post Office pre pay benefit requrement. It's making the Post Office look really bad because they appear to not have enough to operate. The truth is they operate just fine, and are self-funded. Congress changed rate structures and imposed prepament of multiple decades of benefits, both of which would make no sense to any reasonable organization.

It has nothing to do with desire for markets (other than inspiring people that they work better), its the political CYA and patronage that allows people who the government has made commitments to to die. When you can kill people and not go to jail, it is beyond belief.

Actually, in the case of the Post Office, it does. The same is true for other successful government programs and services.

When you say "cheaper" you mean to partialy subsidised services. I'm refering to tollroads, train networks, healthcare, pensions, etc. What you "pay" is not the real cost, but paid for in good part by the Government's budget.

I'm pretty sure they mean 'cheaper' as in 'lower total cost including that incurred by the government' not just 'the end consumer pays less'.

It is strange that you seem to believe the free market is the only way to achieve efficiency.

From experience, yes. That's my understanding. I have worked on several transportation infrastructure projects, and now work in energy, and government-led projects (local, regional, national) tend to be more expensive (even if we include the repayment of debt) than private funded projects.

Did you not click on the link? IMO the site does a pretty good job of making it crystal clear that it's referring to the full cost (all levels of government + business + individual + other).

Sure, I did see the link to the data you provided. Unfortunately that doesn't provide the entire picture, lets not be naïve about it. US healthcare cost is not "expensive" because it is private. Some of the main reasons why it is expensive are (i) lack of pricing transparency, (ii) redudant test culture in US healthcare, (iii) lack of expenditure in preventive care vs curative, etc. This issues can be addressed without the need of nationalising any industry.

Showing just a healthcare expenditure vs GDP figure doesn't address the root cause problem, and it defiently doesn't explain that public is better than private, and vice versa. I'm not talking out of ignorance, as my father is a orthpeadic surgeon in the public healthcare system here in Europe, and the above is a logical fallacy that doctors are well aware of.

I would say that it depends of the sector. The 'laissez-faire' policy works very well in some markets and fails badly in some others.

A good example of a market which works well almost without intervention could be the coffee market, since it's really difficult to have a monopoly on any side (farming, distribution, selling) and the incentive is aligned with the customer's best interest (selling coffee to get more money). A lot of physical consumer goods are in this category.

In between, you have markets with a high cost infrastructure but where the main goal is to be a public good. These market need constant input because their interest is not entirely aligned with the consumer. ISPs can be a good example of this, if you don't put laws to correct the default behaviour, it will never work well. But with good laws, it's fixable.

At the opposite end I suspect there is markets where the private system will never work, whatever laws you put in place. Education, Health related industries, Prison and Justice system would fall in this category. There will be no law strong enough to change their incentive so it's aligned with the public.

> I've yet to see any one industry that has been nationalised as is performing better (in every sense) than the private sector.

The nationalized health care programs seem to be performing better in other countries than ours.

Depends on the countries. Socialized healthcare in my country is notoriously terrible. Perhaps those other countries would be even better with privatized healthcare.

Depends on how you define "better." In any nationalized system with controlled prices, you will have shortages.

You define it as better healthcare outcomes (life expectancy, infant mortality, etc.) at 50% of the cost (UK).

Or, in one extreme case - the same healthcare outcomes at 1/10th of the cost (Cuba).

>In any nationalized system with controlled prices, you will have shortages.

In any system where there is scarcity you will have shortages. Period.

Cuba is a really interesting example because it demonstrates the importance of least-common-denominator care. You're not getting high-tech imaging or brand new drugs, but they deliver a basic level of care pretty uniformly across its population. And the outcomes speak for themselves - on average they're just as good as the US.

The problem with US outcomes is really disparity. A lot of people have very little access to health care and that drags our averages down like crazy. If we could get these kind of "solved-problem" drugs out to everyone who needs them, our average outcomes would jump quite a bit.

Cost is a whole different situation, and that's a much more difficult one to solve. Everyone from manufacturer to insurer to doctor wants their cut, the elasticity of demand for a good without which you will die is zero, so there's very little incentive to keep cost down. There's a few places you can point that are particularly excessive (direct-to-patient marketing, excessive spending on terminal patients circling the drain, etc), but in general it's the death of a million cuts.

Pumping generics is one of those cases that's clearly abusive. With regard to the specific problem, if you try to limit their profits pharmas will simply take their ball and go home - they won't produce it. For a real-world example of this, you can no longer get the Lyme Disease vaccine for humans - nobody makes it anymore, you can only get it for the veterinary market. Evergreening is a similar problem.

In such cases the government really needs to either contract out production of a supply, at-cost (including interest, distribution, etc). If no one will do it, bite the bullet and make it ourselves. If our national labs can figure out how to manufacture high-quality biological or chemical agents, we can figure out how to make high-quality vaccines and drugs as well. Public health is a matter of national security when you get right down to it. Shouldn't we be able to ramp up production of an Ebola vaccine if we really needed it?

>Pumping generics is one of those cases that's clearly abusive. With regard to the specific problem, if you try to limit their profits pharmas will simply take their ball and go home - they won't produce it. For a real-world example of this, you can no longer get the Lyme Disease vaccine for humans - nobody makes it anymore, you can only get it for the veterinary market.

Pharma needs outright nationalization or competition from the public sector at the very least.

We've played these games before where monopolistic private companies threaten to flip the switch on critical services. The solution to this one is the same as it was to companies that refused to provide mail service or electricity when it "wasn't profitable enough". Nationalize them and provide it at cost. It's simple and proven. Hell, it's likely that the mere threat of it would be enough to panic pharma execs into playing ball.

A great deal of pharma profits comes from taking research from the public sector and commercializing it anyway. Cutting the fat from the process (executive salaries, marketing, bribes to doctors) would be vastly improve the efficiency of the system.

Even if research done in the private sector were 40% less efficient than that done by Pharma companies (and there's no evidence that it's any less efficient), by slashing marketing costs to zero we'd still come out ahead by nationalizing them.

I tend to agree with you - I'd like to see an NSF-style grant system where promising drugs are taken all the way from blue-sky to market. There they should be sold at-cost, where "cost" includes licensed production as well as amortizing the cost of development for the drug (or the average total cost of the the whole pool of drugs) over say 25 years. Apart from these issues there's simply a lot of diseases that <1K people get worldwide, and nobody in their right mind brings those to market unless they can steal your wallet. It's a case of utter and total market failure in all respects.

The thing with marketing is that it's a win-win for the person doing the marketing. Direct-to-patient marketing has real-world returns (ask your doctor today if the purple pill is right for you!) and a rational player will put money into that investment until returns no longer exceed costs. However on the whole it drives up costs for everyone since people who don't actually need it seek treatment, and then get prescriptions. Regardless of anything else you do, you just need to outlaw direct-to-patient marketing. It's a perverse incentive and we're the only nation that allows it.

The US has plenty of shortages of meds, but in that system the shortages are blamed on the intended recipient. "You didn't have a good enough job; you didn't have good enough insurance".

We have shortages in the US. Drugs nobody wants to produce because there's not enough money in it. Artificially produced shortages caused by DEA putzing around with supplies. And now, shortage of affordable Daraprim.

Price controls only cause shortages if the supply in inelastic and demand is elastic. If you make beer cheap then people will buy more until you can't keep up with demand. But pharmaceuticals (especially rx-only) don't work that way, because people only buy them if they really need them and need is relatively static. It also helps that most pharmaceuticals benefit well from economies of scale and are made from non-scarce feedstocks.

One way to "avoid health issues" is to treat people when they get sick, not wait until they get sick enough that their terror of bankruptcy is overridden by their suffering. This is what the "national health service" in the UK will do. You go in when you have an infected hangnail, not wait until you have blood poisoning. And they treat you. And it's free.

In the US the government bits of health care out-perform the private bits of health care.

One of the reasons the US has good health outcomes for some things like cancer is because of the huge amounts of government spending.

I hope this clarifies my comment https://news.ycombinator.com/item?id=10251846

Virtually all national health care systems perform better (in every sense) than the American private sector one.

That's definitely untrue. Check out the cancer survival rates. The US exceeds most countries by far.

Now, if you had said "Virtually all national healthcare system provide better care based on cost" I would have agreed with you.

There are many rankings that put the US healthcare system as a whole behind its economic peer countries whilst spending far more per capita. Example:


Excluding 15% of the population from all but emergency care pretty much guarantees this outcome.

This. I used to buy breakfast from a small food place. The 21-ish cashier lady always gave me a nice 'good morning' and a smile.

She wasn't there one morning and I asked where she was. She died - something to do with her kidneys and she didn't have health insurance.

Now the US gets to statistically ignore her death and claim it provides excellent health care to its citizens?

Why would the US ignore her death? Your comment makes no sense.

The US system is motivated to overdiagnose cancer.


"We need to be careful when comparing US and UK cancer care"


according to the last CONCORD study, this seems to be not true.


numbers in the US are good, but not significantly better than, say, germany.

I agree, a healthcare system, the question is at what cost per patient/treatment. The healthcare system, is a system, not an industry per se. Don't get me wrong, I'm all for public healthcare... but the comment feels like a knee jerk reaction.

The US government currently spends more per capita on healthcare costs than Britain, France, or Canada.

Is that true? Because when you combine that with the amount that US citizens spend on private insurance and other self-funded health care expenses, wow.

Edit: Actually I found some OECD stats[4] on that suggest that _public_ spend in the U.S is actually higher than the _public_ spend in Canada/UK/France (though for the latter two they are almost in margin of error territory) so the parent is correct.

Original post:

No, it's not true. In 2010-2011[1], US had the highest expenditure in the world on health per capita according to WHO and OECD, but those stats are combined public _and_ private expenditure.

World Bank stats show Norway & Switzerland as spending more per capita[2] over the same period, but then says that 'data is in current U.S dollars'. The data for these stats is from WHO, so not sure if currency fluctuation or something else is a factor here?

According to [3], per capita public healthcare budget for 2011 was $3,768 vs. an overall spend of $9,146, so 41% of the total healthcare spend was public money.

In any case, I think all these stats can reliably posit is is that combined public and private spending on healthcare in the U.S per capita is one of the highest, if not the highest.

1: https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...

2: http://data.worldbank.org/indicator/SH.XPD.PCAP?order=wbapi_...

3: http://www.usgovernmentspending.com/year_spending_2011USdn_1...

4: https://www.oecd.org/unitedstates/Briefing-Note-UNITED-STATE...

re: edit: wow confirmed. That's amazing, and pretty embarrassing.

Be careful what you wish for. Do you think birth control pills or Plan B would exist today (consider Griswold vs Connecticut, 1965) with nationalized drug creation? Do you lament the government didn't spent billions developing a drug to cure homosexuality, once considered a mental illness?

"The Benefits and Savings of Publicly-Funded Clinical Trials of Prescription Drugs"


If this were the case, chances are very good that this drug wouldn't exist at all. Drug R&D would become politically driven, with earmarks being given by politicians which benefit their constituents rather than actually advancing the state of the art. Public money would be poured into research for drugs which address ailments in the public consciousness, rather than into drugs which may actually have a chance of success.

You really don't want medical science led by popular opinion.

Maybe you could pull that off in some country, but not the USA.

Why wouldn't it work in the USA?

Do you really want Congress arguing over which drug research to fund?

Why would Congress be micromanaging it? They don't do that for NASA.

This was probably a bad comparison to make because they actually do try to micromanage NASA but I do agree with you that for the most part they would not be very involved.

The SLS program is jokingly called the Senate Launch System: https://en.wikipedia.org/wiki/Space_Launch_System

Any nationalized program would have to be funded, meaning there would be yearly appropriations bills. Maybe I'm just cynical, but I think this could become a circus every year.

As for the NASA comparison... I don't really want drug research to be chronically underfunded.

So, I have a great but perhaps hare brained new idea for a drug/treatment. I'm willing to throw my tens of millions (heh) at it.

Instead I have to go ask permission from the government, fight for funds, wait for approval, build massive infrastructure just to prove to the government I'm not wasting their money, and so on?

I've worked on government contracts - defense - most of my career. It is not a model of innovation, low costs, fast delivery, friction-less pivots, and the like. It's a story of incumbents, outdated regulations (waterfall for the win!), inability to get money for great ideas, buckets of money thrown at bad ideas, cronyism, lobbying, you get the idea.

It's trivial, and lazy, to talk about "big pharma" - to paint them as evil. Yes, there is plenty of less than stellar activity, and I had a gf that was in the business. But she also worked for a small start up that would probably be impossible under your model. That world is full of idealistic people that want to do good in the world. And yes, there is also unsavory business practices. But so much good has come from people with a dream. Bethesda is the pharma equivalent of SF in tech. Lots of money flowing, lots of great ideas, lots of moon shots, lots of quick failures, lots of success. It ain't ideal (great ideas, no funding, for example), but I'd suggest your idea needs substantial sketching out to explain how it would successfully replace this sort of activity.

edit: my first job was working for a small company that contracted for NIH. In my short time there I heard so many stories of research being started, then something becomes the hot topic of the day, funding is withdrawn to throw it at this new topic, and the old project is left to die. Not that the new topic was a bad thing to pursue, but if you keep switching focus before getting results you are wasting tons of money. The NIH is regularly criticized for taking only 1 approach to a problem - investigate drug X or treatment Y. It's unbelievably hard to convince Congress that you should spend a ton of money on a research program, but then go and run 10 other programs that assume that that research program will not pan out. No, that's stupid. It's incredibly believable. I recall pulling all nighters, being called on the phone by congressmen or their aides, trying to pull data together for a presentation on the hill to get or continue funding. Ultimately politicians were making research and health decisions. Madness. Everyone I worked with had their hearts in the right place (beware the easy, lazy assumptions!). Individual politicians that I've run across are intelligent and trying to do the right thing as they understand it, and often that understanding is very sophisticated. But the system doesn't have a heart, whether that system is capitalism, start ups, or government.

"I have a great but perhaps hare brained new idea for a drug/treatment. I'm willing to throw my tens of millions (heh) at it."

If your motivation is to make the world a better place, you just publish your idea and if it will indeed be as good as you think it is, things will roll (in the supposed system) by themselves from there on. If your motivation is to get (much) more money than you pour in it when there are lives at stake, then this rises a red flag and should be treated as a public threat.

> Instead I have to go ask permission from the government, fight for funds, wait for approval, build massive infrastructure just to prove to the government I'm not wasting their money, and so on?

As opposed to approaching private companies for permission, funds, approval, adhere to their compliance and management policies, and so on?

> So, I have a great but perhaps hare brained new idea for a drug/treatment. I'm willing to throw my tens of millions (heh) at it.

Your model where the financier is the same person as the scientist is not a common one.

What's the last thing you bought that was manufactured by government. If you think prices are high now, then go look at prices of non subsidized government manufactured products. I think you will change your mind.

I buy information from the government all of the time. It is cheap and very high quality -- authoritative, in fact.

The drugs might end up being cheaper, but there will be much less research for drugs (aka less drugs in the future). Greed is a good motivator.

I actually don't agree at all.

There is a big danger in the approach I gave, but it's political interference. If the god-botherers can be forced to keep their mitts off, I expect my way would create more basic research and more simple effective drugs.

Greed motivates chasing the slight change that will let your company replace an ageing-out-of-patent drug with a freshly patented one, drugs for rich people, drugs aimed at insurance payers, and it de-motivates improving the basics.

Also preventing hair-loss, and prolonging erections. https://www.youtube.com/watch?v=GA0l1JXhLaI

Greed is a good motivator to make up diseases, fake test results, and to use business tactics to jack up the price of ancient drugs by three or four orders of magnitude.

I see those as an adverse outcomes, so I would prefer a different way of funding drug development.

"The Benefits and Savings of Publicly-Funded Clinical Trials of Prescription Drugs"


"Patent Monopolies and the Costs of Mismarketing Drugs"


I have a feeling the motivated researcher is not the one getting the money. We just need to cut out the middleman.

I'm not much familiar with the system in the US, but I got the impression that the state already subsidises a large amount of the research anyway?

Big pharma/biotech spends about 2x what the NIH spends on research.

And that doesn't include the tens of billions in biotech VC funding.

Then what does it include?

Reinvested profits?

The biotechs with which I am familiar are the early-stage research arm of the development chain. Kind of like acqui-hire startups for google. They live off of investments from vc and/or license deals for final product. My impression was vc was the bulk.

But my view might be myoptic, so I was double-checking.

You are correct. Biotech start-ups live off of VC funding and maybe some NIH funding if they are lucky. Most of them never bring a product to market, instead they are acquired by a big pharma/biotech who has the capital to bring the molecule through FDA approval.

The last number I saw was $6B invested in 2014.[1]


Ahh, okay. What ends up happening with the drug companies which aren't acquired by larger firms (in your example Google) is they begin reinvesting profits in R&D and acquiring other companies.

Eli Lilly, for example, spent ~$4.5 billion on R&D in FY 2014 (24% of their total revenue) - http://www.lilly.com/about/key-facts/Pages/key-facts.aspx ... I'm not sure how big the VC deals were for 2014, but I feel like if you include Pfizer, Genentech, 3M, GSK, and then all the smaller ones big enough to be listed on https://en.wikipedia.org/wiki/List_of_pharmaceutical_compani..., VC funding will be maybe 2-5% of the total private pharma spend.

This is actually a lot like what Intel, Nvidia, and Google do. Basically your revenue takes over where the VCs left off. If the VCs are doing their jobs correctly, reinvested profit R&D is in aggregate much higher than VC dollars... Intel spent $3 billion last year on R&D for example... https://ycharts.com/companies/INTC/r_and_d_expense

I feel like we are defining biotech differently. Pfizer I would classify as pharma- they bought the biotech Coley a few years back after Coley did some research into bladder stuff IIRC.

Perhaps I am simply stating a tautology b/c of the narrow definition, but I'm on the same page with refurb.

I think the point is actually general enough to include every industry: VCs give you enough money to pay people to do R&D / product design until you've got a good enough product that your profits pay for the R&D / product design. In some product industries, this happens by switching to creating a new product (so 3M, GE, etc), and in some this is an endless stream of updates to the existing product (Google, Apple, Intel, etc).

This process can be short circuited by an acquisition, but of course the acquisition is ultimately paid for by past customer profits too.

In the context of https://news.ycombinator.com/item?id=10251676 's assertion that "Drug creation needs to be nationalized, 100% tax funded all the way from researcher to trials to manufacture, and the drugs sold at cost thereafter" which was followed by brixton's reply that "The drugs might end up being cheaper, but there will be much less research for drugs" this remains a very important point: drug R&D folk aren't in it for the VC funding... they're in it for the profit margin. If you remove that light at the end of the tunnel, there are no startups, and the smartest of us go work for the Googles of this world.

(Though FWIW I do think you, refurb, and I are all roughly on the same page if we limit our scope to startups.)

I'm not going to hold my breath waiting for the likes of Martin Shkreli to use their profits to fund new drug R&D. Call me a cynic, but I just don't see that happening.

The same greed makes the drug industry to develop drugs which treat the illness rather than cure it. Regular drug users are much better for them than one-time users.

This is an absolutely ridiculous statement. Last year Gilead sold a drug that cures hepatitis C. Cures!

The error in your thinking is that curing a patient results in less money than just chronically treating one. Not so!

That is a very real statement, which I personally experienced, BTW. I had a health issue and my default option was to address to a private clinic which had good image and publicity. Their attention to clients was irreproachable, ("clients" instead of "patients" is intentional inhere,) but they were elusive when I asked them for estimates on time of treatment and money. This marked some red flags for me and I was in response elusive about my decision to start the treatment right away. I started to dig a little bit on patient's experience with the said clinic and found not-so-encouraging feedback (mixed with a lot of downplay and apologism). I then turned to public health care service. It was frustrating (as expected) but they weren't trying to lure me in some kind of "relationship" and were straight to the chase. Public health should not be left to business.

While I have no love for the incentive structure for drug companies, I agree that conspiracies about them deliberately prolonging sickness are nonsense.

Imagine the kudos that would go to the researchers and the company that cured the common cold! And a pill for that would sell well enough to offset the losses from palliative lozenges, decongestants, etc. And it's not like they are short of other pills to sell.

>The error in your thinking is that curing a patient results in less money than just chronically treating one. Not so!

Come again? Please explain how that works.

> The drugs might end up being cheaper, but there will be much less research for drugs (aka less drugs in the future). Greed is a good motivator

The article pointed out that the drug in question is over 60 years old. I doubt the original creators thought about profitability at a time frame where they are most probably dead anyway.

Unfortunately these greedy companies are sinking billions into erectile dysfunction drugs.

most drug research is done in university anyway, and in most countries government funded. big pharma does the part after that in order to get it to market. trials and tweaks etc

Keeping voters in good health is a good motivator too.

Hence the manufactured outrage at "socialism". The only way to make people consciously vote to stay poor and sick is to convince them that God, freedom and apple pie depend on supporting team blue rather than team red.

That makes for a superficially witty slogan but look at inner cities.

Poor people have been voting for Democrats for 50 years and they're still poor.

Getting people out of poverty is a lot more complicated than which political party one supports.

Mayor does not trump congress, unsurprisingly.

It depends on the issue at hand.

A Mayor can put together a deal that will bring an employer(and all of the jobs that it brings along) to a municipality, congress doesn't do that.

A Governor can influence the business climate of a state. There's a reason why manufacturing jobs are moving to southern states.

"Greed is a good motivator."

Greed in here can also be a cause for the tragedy of the commons, which is more serious than any opportunity progress! Because of the said greed the drugs reached agriculture having all kinds of unintended effects, the most serious of which being development of many drug-resistant pathogens.

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