A Huge Overnight Increase in a Drug’s Price Raises Protests
nytimes.com
nytimes.com
http://blogs.sciencemag.org/pipeline/archives/2015/02/20/mor...
In the past, he actually planned to limit access to the existing drug (ie. the one he increased the price on) to prevent a competitor from creating a new generic formulation and gaining FDA approval. It appears he modeled this heinous approach on a maneuver by Celgene to prevent production of generic thalidomide.
http://blogs.sciencemag.org/pipeline/archives/2014/09/11/the...
It seems to me that the FDA needs sharper teeth in this arena to ensure access to an existing drug is not a limiting factor in the approval of generics.
There are currently two main chemotherapies used for pancreatic cancer in England. First line is folfirinox. But that can have nasty side effects, so the less effective gemcitabine is used because it has less side effects.
Celgene make abraxane. Abraxane (by Celgene's own data) isn't as good as current first treatment; and has many side effects so can't be used as second line treatment.
Celgene's data shows median life extension on abraxane as two months.
A charity - pancreaticcanceraction.org - has started a petition to get NICE to change the decision. The petition states abraxane gives two years extra life which is true for a few people. Equally true would be "abraxane gives two days extra life".
The shenanigans come from the amount of funding and campaigning material Celgene has provided to pancreaticcanceraction.org, while making it seem like they don't have any connection.
https://www.nice.org.uk/news/press-and-media/the-cost-of-nab...
https://pancreaticcanceraction.org/news/english-patients-nic...
> With the price now high, other companies could conceivably make generic copies, since patents have long expired. One factor that could discourage that option is that Daraprim’s distribution is now tightly controlled, making it harder for generic companies to get the samples they need for the required testing.
> The switch from drugstores to controlled distribution was made in June by Impax, not by Turing. Still, controlled distribution was a strategy Mr. Shkreli talked about at his previous company as a way to thwart generics.
How can this be true?
Importing a (tested) cheaper version would solve this price abuse pretty quickly but of course the government, AMA, etc loves to meddle (of course some control is necessary)
Last year, I asked my physician's assistant (I have never actually met my personal doctor) for a prescription and he told me that he didn't believe Provigil/Modafinil was even made anymore and tried almost emphatically to get me to take Nuvigil instead. I said no and that I'd try anyway. It was available and my insurance covered the Provigil ($750/month).
> The Federal Trade Commission has reached a settlement resolving the Commission’s antitrust suit charging Cephalon, Inc. with illegally blocking generic competition to its blockbuster sleep-disorder drug Provigil. The settlement ensures that Teva Pharmaceutical Industries, Ltd., which acquired Cephalon in 2012, will make a total of $1.2 billion available to compensate purchasers, including drug wholesalers, pharmacies, and insurers, who overpaid because of Cephalon’s illegal conduct.
https://www.ftc.gov/news-events/press-releases/2015/05/ftc-s...
It's not hard to get samples because the pricing went up, but because they moved it to a direct sales model and actively prevent the drugs from getting in the hands of a generic maker. It seems absurd.
What Turing is doing is exploiting the natural monopoly that has formed for this drug. I was able to find only two global producers of this drug after a quick search (Turing and a generic Alibaba listing), which if true means Turing is the only game in town for a lot of supply channels. In addition, the medical market is relatively unable to adapt to these sorts of market fluctuations due to 1. supply chain being slow to respond (high regulation and insurance) 2. high need of patients themselves and 3. lack of knowledge about the drug and alternatives due to the infrequency of its prescription.
What this adds up to is that Turing can buy up the manufacturing of this drug, jack up the price, and pocket the gains for a year or two while the market adapts. Make no mistake, the market will adapt and undercut him and he will destroy his monopoly by doing this, but he will also achieve perhaps many hundreds of percent ROI on his purchase of the drug. Afterwards he can sell the drug to another company and move on to another vulnerable natural monopoly in the drug space.
>“It really doesn’t make sense to get any criticism for this.”
It absolutely does, though. If he's able to exploit a pricing inefficiency as a producer, then the press can exploit him by hanging him out to dry in the public eye. Companies can, and should, face public relations campaigns against them for unethical, if legal, behavior.
What does bad PR mean for them? Nobody's going to refuse treatment if they would otherwise afford it.
Sort of. Their competitor-plaintiffs are no longer going concerns, and MS are still going relatively strong; so one might argue that the "trouble" was of little consequence. The length of time all of that took to wind its way through the courts means that patients will die waiting for the market/courts to sort itself out.
Technically, both are possible, but you're describing the situation inaccurately:
and kill those who can't afford the increased prices in the process.
The article says that they're providing the drug for free for those who can't afford it. So no one is dying due to the price being raised.
Anyway, one poor outcome doesn't mean more regulation is needed. You need to weigh the costs against the benefits, and when that is done, the costs end out higher, even on the existing regulation regime.
Can you propose specific regulations that would fix this, and not cause more harm elsewhere?
Sadly, that can't prevent pharma companies from arbitrarily jacking up prices less dramatically on many other drugs and going "under the radar" as far as public outrage is concerned. For that, you need careful and assiduous regulation. But in an era where people run companies that do real things like a hedge fund, I am doubtful things will get better anytime soon.
Do you have any particular proposal to solve the problem? Saying "regulate!" doesn't help unless you can provide specifics.
GlaxoSmithKline produced it and it just wasn't worth the trouble to discontinue or to muck about with. No one would make a generic because it would be more expensive to enter the market than profits could be realized.
So the monopoly is natural because no one with any good sense would consider competing.
That GSK sold the rights to this drug (and quite possibly other similar drugs) to some other company in a rational bid to monetize inefficient assets and increase shareholder value has upset that monopoly but Turing just needs to exploit the market until the generics show up. That and the price they paid explain Turing's strategy.
Here's an example where patient safety rules were used to stop competitors getting samples: http://marginalrevolution.com/marginalrevolution/2014/09/co-...
I know we're in FDA-land where logic doesn't rule, but this beggars belief. This is similar to the nonsense by which HFA inhalers knocking generic CFC inhalers off the market.
Any competent organic chemist can tell you if you've got pyrimethamine or not. This isn't some exotic chemical. There's published spectra (http://webbook.nist.gov/cgi/cbook.cgi?ID=C58140&Mask=80). Having a competitor's drug will simply tell you anything new. If it does, they've behaving deceptively.
The FDA has a requirement that generics are bioequivalent, not just the same drug.
http://www.fda.gov/Drugs/EmergencyPreparedness/Bioterrorisma...
If the FDA is instead approving other characteristics by happenstance, it leaves open the door to market abuses like the one we're seeing.
P.S. I hope that micro-laboratories and production diversification will soon put a final "paid" to such exploitative strategies and tactics. Yeah, the "risk" of a chemistry and biologics lab in every back yard and basement... I'm increasingly of the sentiment that it is less than the increasing risk of autocratic and monopolistic control of centralized production and distribution.
This is a somewhat surprising development in my own attitude, to me. As I recall observing all the bone-headed and sometimes downright risky and uncaring behavior of e.g. chemistry students, including potential majors -- and some of the instructors -- back in college. Part of me is strongly concerned about keeping them from poisoning others and whatever environment they find themselves in.
Nonetheless, as I observe an increasing momentum towards artificial scarcity and profiteering -- often by people with no credit for making or enabling the original discoveries and creations -- I see decentralization as the only effective response.
I, and many others, tried "playing by the rules." Turns out, they've been increasingly rigged, and us, screwed. I'm not the only one deciding, "you have to take care of yourself." Not just in general, but seemingly in every aspect.
> With the price now high, other companies could conceivably make generic copies, since patents have long expired. One factor that could discourage that option is that Daraprim’s distribution is now tightly controlled, making it harder for generic companies to get the samples they need for the required testing.
This should've been the second paragraph of the article, not buried near the bottom. The author seems to be expecting a system to make legal monopolies behave nicely. Instead we should stop creating legal monopolies.
If we as a society had said "You know, it's more important that we have a secure, available supply of this drug than to be friendly to corporate interests" and had acted accordingly, this would've gone a bit differently.
As it is, the "legacy support" for pharmaceuticals is probably not going to be that large as new and improved things come out.
wft? I'm kind of confused. Wikipedia says "Doxycycline is available as a generic medicine and is not very expensive. The wholesale cost is between 0.01 and 0.04 USD per pill." Why on earth are they paying $1,849 a bottle? Maybe they are only allowed to buy of certain suppliers with FDA licences or some such rather than just buying it from India for a few cents?
edit: I see the " $750 a tablet" "Daraprim, known generically as pyrimethamine" is avilable on AliBaba for "US $1-10 / Kilogram " http://india.alibaba.com/country/products_india-pyrimethamin...
Some weird import restrictions going on I guess?
Any competent university lab could turn up a few Kg of pyrimethamine. You need a GMP compliant FDA-approved facility to make it for medical use.
A nice feature would be if there was a way to note which article links I clicked on or which comment threads I have visited. (If I comment then it's easy to find but I read more than I comment). That way I could just browse back that history and could have easily found that article that I was looking for.
I suppose we could save/serve which comment threads users have visited but that would be a lot of data, so I wonder if it wouldn't just replace one needle-in-haystack problem with another.
I am somewhat ignorant about how the drug system works in america, but theoretically, can one buy the drug where it's cheaper (say, India) via the darknet markets like silkroad or whatever and have it shipped to the US?
1) You can't guarantee they are real. The upside of buying drugs in the US is that if you get fake pills, it is a huge deal and people get sued out of business for this. Rite Aid (A national drugstore chain) got caught shorting the pill count in prescriptions and they got into big trouble.
2) The Department of Homeland Security will open packages from companies that they suspect are selling medicines from abroad and shipping to the US and impound the pills. The odds are good that you won't get caught, but if you do, it can become a real hassle.
Regarding DHS and CBP, both are overblown concerns. You'll receive a letter in the mail noting they've confiscated the material in question, which you usually send to the seller who will replace the shipment at no charge to you.
You might receive an Official batch that may or may not be checked by their local governments, but it might also be from a more shady source.
Don't worry! It's just capitalism.
Economic resources such as entrepeneurs, capital, equipment and scientists follow the money. If there's money to be made on Wall street, resources go there. If there's money to be made in mobile apps, resources go there.
As mentioned elsewhere in this thread, the price being so high now shows that the people buying it at that price truly value it that much. When it comes down to it, many people are willing to spend almost anything to stay alive and healthy.
The extremely high prices (and therefore profits) for specific drugs simply leads more resources to go into the development of additional similar money-making and life saving drugs.
It would be a shame if we capped drug prices at some artificially low level, as that lowers the incentive for additional resources to develop additional drugs.
I'm asthmatic, My life can cease in a pretty painful way if I'm denied access to drugs- my illness is an easily preventable one, so why should I die gasping? You're right I'll pay anything to keep living.. I'll literally starve before I stop paying for my medication. But why would you wish that upon me? Because drug companies can have an extra slice of pie?-- forgive me if I'm wrong but isn't private healthcare mostly about making shareholders rich and -not- about significant R&D on preventable diseases (which would then be a tax on the ill for their life).
I come from a country with social healthcare, I grew up the product of a bottle of whiskey and a bad decision, thus, poor.. I'm currently putting more money into my government through taxes than I ever could have possibly taken out- but given the draconian practises you seem to favour, I would have died as a child because there is no way my mother could have afforded to buy my medication -and- keep me fed.
The question is really a macro one as much as a micro one. What percent of our resources should we spend on healthcare? That question is simply a sum of all the prices paid.
I actually think that it's possible that in much of the developed world, economies may not be spending enough on healthcare, due to state intervention. Like much of the developed world, I already have a car, a TV, a computer, enough food, leisure activities, and live a comfortable life. Why would I not spend any of my truly expendable income to live a long and healthy life?
I know this is an internet convention of sorts, but please don't do it here, even when someone advocates bad policy. HN comments should be free of personal swipes, especially otherwise decent comments like this one.
I was rather dumbfounded when I wrote it and I should have taken the time to calm down and proof before submitting.
Health insurance, mandated as it is now in the US, is really a secondary tax we all pay to ensure people get a minimum level of care in the case of required medical care. Increased costs in medical treatment affect everyone that has health insurance to a small degree.
This being a "life-threatening parasitic infection" means that normal rules of supply and demand don't quite fit (as well as the fact that health insurance already makes this an inefficient market). There isn't always a price at which people will be unwilling to pay, beyond their inability to pay.
More profits for companies that develop drugs are only good in their eventual outcome, which is new drugs that are either better or cheaper than the existing ones. Manipulating a market to keep prices high on a drug may result in a development of a new drug which is either better or cheaper, but we have to keep in the ind the actual effects on the market right now, which is a more expensive and less available drug.
It would be a shame if we allowed a company to manipulate a market in the hopes that the extra money led to a positive outcome and that resulted in real deaths and pain in the meantime. I would tend to think that if they need to manipulate the market in that way to get the money they need for research, perhaps their past research efforts have not been as beneficial as some other companies, and that money would be better going to the companies that provide real benefit.
Or to put it another way - the government can instantly save many lives in the short run by forcing all drug companies and hospitals to make all their products and services $1 each, but this would have disastrous consequences in the long run, as every single one of those companies would quickly exit the market.
Look at some of the new cancer companies (CAR-T technology). These companies are raising hundreds of millions of dollars in Series A. Why? Because investors think they'll be a handsome return on the other end.
When the entire economy is market-based, if you lower profit incentives in one industry, capital/talent/resources will simply flow into other industries.
Maybe we should cap doctors pay at $15 an hour too. But I suspect when you are on the operating table, you want to pay top dollar for the person about to cut you open.
"Cycloserine, a drug used to treat dangerous multidrug-resistant tuberculosis, was just increased in price to $10,800 for 30 pills from $500 "
Right and I don't take any drugs that even cost $500 for 30 pills (let alone $10,800). So this article could have just easily compared the pills that I buy 30 for $10 to 30 for $500 and written a similar article.
Were it not for a (probably illegal in this case) monopoly, other people would be able to make that same pill for $5 per tablet. And then nobody would pay $50 for the pill.
Supply and demand IS NOT the same as "charging everyone as much as they will pay for everything". It's inherently unfair to everyone who has to buy that thing, and that's why people think it's a rip-off, because it is.
[edited to remove some hyperbole]
Fairness is whatever two people will agree to pay for a service.
Imagine how silly it would be if we all paid the same amount for seats on an airline - which is how it worked before deregulation. Many seats would go empty, the utility would not be maximized, and we'd be missing out on the great transfer of wealth from the rich to the poor.
You might say that without it airplanes would not fly at all, and you might be right. But it's incredulous to claim that without these profits the medicine would not exist at all; it has existed already for 5 decades. (And we have patents as a system specifically designed to allow for funding the creation of drugs)
You've just pushed the problem around. Saying "get rid of the free market" in only a solution if you have a concrete alternative.
In a monopoly situation, the price tends towards 100X in my example, which is still less than the value provided. Even in a monopoly, nobody's paying more for a product than they receive value from it.
Yes, it may still seem unfair, but what else are you proposing? Nobody should sell the product? How is that making anyone better off?
In theory, you could calculate the exact value provided by this drug (under the QALY model).
Under your theory a fair method to price life saving drugs doesn't exist. The person getting the drugs will effectively extract infinite value while the company will only extract a finite value.
Not really true, I'm afraid. People killing themselves (or allowing others to kill them) to ensure a payout to their families happens with some regularity.
2. Usually this happens because they place a higher value on their children's life and well being than their own. So even in the case were someone does place a value on their own life, it's only in relation to someone else's life.
The case of 2 is interesting because it shows that of the people who would accept a finite sum for their own life, very few would accept a finite sum for their chidren's life.
Since paying for the child's healthcare is the responsibility of the parent in a free market, we are back to my previous point that their is no fair free market way to price life saving drugs.
You only see people asking questions about "well, who captures the extra value? what's fair?" etc when you don't have a market. When you actually have a market, then these questions cease to be relevant, because the price is already set.
The problem has nothing to do with free market concepts breaking down, or disagreements about what's fair. The problem is that we've artificially prevented this market from existing. Fix that and the problem goes away.
Who is worse: the person who doesn't save the child, or the person who saves the child, and sends a bill later?
Such simple thinking is full of the holes for exploitation and there will always be someone who will exploit them. Medicine is especially sensitive, because medicine can be priceless in value for the human who needs it, but that same human might not be able to pay that much. You can introduce government help, but if such exploitation is allowed, it would simply end up in a waste of tax money.
One thing is to allow companies who invest into products creation to receive the profit from it by using monopoly and charging as much as they like, and completely another is buying the company and starting to charge many times higher for the medicine that was available for years.
This might not be a popular view, but I can see no reason to think that such an exploitation should be tolerated. I simply cannot see how such things benefit humans as a society. I might be missing here something and if I do, please let me know.
I don't think you'd advocate for literally forcing the company to make it and sell it for a specific price.
There's also the concerns I went over here: https://news.ycombinator.com/item?id=10248817
Yes.
> What if the company stops making the drug, then?
A non-profit government sponsored entity manufactures the drug at cost.
Drugs should be priced based on their cost to produce and whatever R&D needs to be amortized, not by how much value you can extract.
Could you point out the flaw here?
I'm trying to remember the name of the company that this happened to. It was like 8 years ago and I think I remember them being a cardiac arrest medical. Anyhow, the company CEO flat out refused the FDA regulators demands that they get their manufacturing process up to standards. The FDA went to another manufacturer (I believe Johnson and Johnson) and asked if they would make the medication and they accepted. The FDA then shut down the prior company.
When lives are impacted, the FDA doesn't mess around. They put CEOs in prison for the crappy decisions they make.
"not having a manufacturing process up to standards" and "raising the price insurance companies have to pay".
Doable. But I think you put too much faith in the government. The government is a natural monopoly itself. If they're doing a shitty job you don't get any other options.
Disagree. A government can be held accountable. Some asshole ex-hedge fund manager attempting to corner the market on a drug can't be.
Accountability is not really the main measure we care about (though it's related to it). It's efficiency. We only really care about accountability because its supposed to increase efficiency. People are supposed to get punished when things are running poorly.
The problem is, no one really gets punished when large government organizations are running inefficiently. The business does not go out of business. There is no competition. There is no real incentive to innovate and beat your competitors.
I think we need to reevaluate pharma law. But I don't think replacing the current monopoly with a government one will do much good of anything.
I've long held the belief that whenever there is a supposed failing of private enterprise- it's almost always actually a failing of government. I've yet to be proved wrong. Government makes the barriers of entry too high in the drug market. It's way too easy to have a monopoly because the government basically grants you one.
Fix pharma competition.
Nope, don't force the company to make it. Force the company to give the formulation to another company that will. This article states the reason it is able to be priced so high, at least for a time, is that other companies will have to reverse engineer it and get a line running. Take out the time of getting the product formulated right and the original holder has to think about the ramifications of any shenanigans they will attempt to pull.
[0] http://fortune.com/2013/01/10/are-generics-really-the-same-a...
It's only because the pharma companies can deal with consumers in the US on an individual basis that you guys get screwed over so much on your pricing.
That's not true at all. The biggest private insurance companies in the US are what? 30-40M lives? That's bigger than Canada. They routinely negotiate for lower drug prices.
Do you know where I could find out whether the NHS is covering Daraprim at the new prices?
The closest to perfect solution in my mind would include all the details to make the medicine in the patent itself (I'm not sure how detailed patents has to be today). This would make it easy for other companies to create a competition once the patent expires and essentially would create a free market.
In the scenarios when it happens that there is only a single player in the market for one or another reason, things get a little trickier. I guess one of the solutions could be a commitment by government to buy/prescribe certain amount of medicine. The price of a unit should be predetermined in such cases to avoid exploitation.
Overall the actual knowledge of how to make a medicine and having a market for it, should make such situation pretty rare when only a single player is left in the market.
Now, in my world every rational person has to see that this is insane. There's no way that the previous price was even remotely possible (even with a loss) that requires the new price.
I don't see any data that supports your 'no one would be willing to make it for less' argument. The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs). Can you back your unlikely scenario? Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less? Were they losing about 700 a pop before they increased the price?
What. The. Hell?
There are currently no other companies that are willing to make and sell the drug.
* The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs).*
The patent is expired, and saying "monopoly" is describing an outcome, not an input. Yes, it's a monopoly, because no other company is willing to go into that market right now.
Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less?
I would deny that any price is "right". If you want to refer to "right", define it and give a way to calculate what price can be right.
As I said in the other comment, there's no good system to determine who should capture the value from a product that costs less to make than it's worth to purchasers, other than a free market.
1) I'm not convinced that no one is interested to create the drug. Numerous people in this very discussion list issues to create a 'replacement' drug, even if the patent is expired. If they are correct (see disclaimer above) that might be a reason why others haven't tried it - or why they haven't succeeded yet.
2) 'Right' price is ambiguous, I agree. In my world, drug prices are ethic problems and have no connection to the so-called free market. No, a working, helping, proven drug cannot cost hundreds of $currency. We can discuss about the need to offset the R&D costs and I'm fine with drugs that costs my health insurance a ~largish~ sum, as long as the end user can get instant and easy access to the drug.
Your comments about putting a price on a person's life and your opinions on drug prices - as far as I can follow! - are impossible to understand from this person's pov. The lack of empathy and the trust in random business/market theoretical stuff to find a reasonable solution for the access to drugs that might very well save lives - that just doesn't compute, doesn't make sense in my world.
I don't believe in free markets. I certainly don't believe in free markets when we're talking about the basic needs of each and every human (for the sake of the argument let's limit this to nutrition and health for now). Health care should be free. Drugs should be affordable. Changing the price of a drug that was obviously doing okay (it was on the 'free market', right?) and multiplying the price by 65, because .. why not? .. is immoral and should be illegal. There's no 'value' to 'capture'. We're talking about a product that the company obviously produced with some sort of margin for ~13.5~ and that benefits the population at large - or at least the subset of the population that requires the drug. There is _no_ reason to increase the price, especially by that ridiculous value, other than inhuman greed. But maybe (see disclaimer) that's what a 'free market' is about - I wouldn't know.
Replace interested with "no one is interested and able". The reasons don't matter (insofar as they cannot be changed), the fact is that no one else is making them.
The lack of empathy and the trust in random business/market theoretical stuff to find a reasonable solution for the access to drugs that might very well save lives - that just doesn't compute, doesn't make sense in my world.
This doesn't come from a lack of empathy. I am (or try to emulate) a utilitarianist. To my mind, the question to ask is "which system will produce better outcomes overall"?
As I've said elsewhere in this thread, this particular example has them covering the cost of the drug for anyone who can't afford it; so the value of a life is irrelevant. The question is "is it better for a health insurance company or the drug manufacturer to have the money?" This doesn't seem obvious.
On the other hand, any claims of "fairness" fail to compute. If doing X improves the world, who cares if it makes things less fair?
Health care should be free.
The world should be perfect. I agree. Now, do you have any way of bringing the world to perfection? Saying "Health care should be free" while ignoring the fact that currently, health care needs to be rationed, does nobody any good.
Who pays for health care, if it's free? Who becomes a doctor, a researcher, if the prices are driven down by politicians with similar arguments to yours?
There's no 'value' to 'capture'.
That sounds to me like saying that every drug company should be selling at cost or close to cost. The problem with that is that there's then much less incentive for investors to fund pharmaceutical startups, which leads to less new drugs being developed, and so on.
You can't ignore economics when building your utopia.