Turing CEO Defends $750 Pill in Reddit AMA
techcrunch.com
techcrunch.com
"People hate because they think I'm charging people $750 per pill even though it costs patients less than $10 out of their pocket"
No.
People hate because you ARE charging $750 per pill. They may only have to pay $10 out of pocket immediately, but one way or another, through co-pays, deductibles, premiums, opportunity cost when employers pay premiums, patients ARE paying $750 per pill.
I highly doubt Shkreli is stupid enough to think that there's a magic pill-paying fairy conjuring $740/pill out of thin air for his benefit, and patients aren't inconvenienced.
But... he DOES think WE are stupid enough to fall for this.
Instead, a charity doesn't have to take profit into consideration and can just threaten: drop your price or we'll persue independent redevelopment. With only the credible threat of spending on independent redevelopment, they could devalue a lot of these orphan drugs, and then buy up the rights/trade secrets to them for open release.
Competing businesses can't do this, because they can't pose a credible threat, because following through wouldn't make business sense. A charity can have non-business aims.
It's an excellent bet even if it is extremely immoral.
http://fortune.com/2015/10/22/valeant-debt/
http://www.streetinsider.com/FDA/House+Oversight+Committee+D...
And the drug companies charge $250 to $750 a pill or $14,000 for a years worth of drugs (recent cholesterol drugs Repatha and Praluent) to $250,000 (cancer drugs) and the drug companies justify it by saying insurance pays for it anyway. Drug companies are charging Americans 26,000% higher than in other countries (eg: Cuprimine, for which Valeant charges $260 per pill is available for $1 in other countries.)
The net result is that insurance rates are rising rapidly, and even if you have insurance you may not be able to make the copay.
As much as I hate socialism, the only solution appears to be Single Payer.
http://www.nbcnews.com/health/health-news/competitor-offer-1...
I think it's funny that people think insurance isn't a (distorted) form of socialism. It's small-scale socialism - you pay into a pool, and those who need resources get it. If you really hated socialism, you wouldn't have any insurance at all.
This is something that changed in the 90s, when attempts at managed care tried to use insurance companies to push down costs. Hospitals responded by consolidating into local monopolies (provider networks) that insurance could not out bargain.
The problem is simply that providers have too much power. Doctors regulate the supply of their profession; doctors in the US make 2X the oecd average. Pharma companies and medical get patent monopolies; drugs cost $300 billion a year above their generic price. Hospitals have local monopolies and patients don't know how to bargain for cheaper care; MRIs cost thousands of dollars.
Insurance takes home a few paltry percent of every dollar spent on health care. The real takers are the health care providers, but we are all too busy shutting on insurers to notice.
The drug (pyrimethamine) has been in the public domain for more than 30 years, but in the US the government imposed costs mean that it wasn't (until now) worthwhile for another manufacturer to go through the process of US certification for such a low volume, low margin drug.
You can buy pyrimethamine for $0.10 a tablet in most of the rest of the world, but that's not thanks to the power of socialised medicine. It's because of less onerous government regulation that means you can manufacture your drug for $0.10, comply with regulations and still turn a profit.
Obamacare is the free market answer.
It encourages HDHP plans which forces the individuals to pay for those pills. Now that consumers are fronting the costs below $1300 or so, they really do care about huge pill costs like this now.
Before, consumers may have not cared. But now, people do care and people will pay attention.
It's one of the reasons for this:
https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
Others: having one predominant type of insurance nationwide cuts down on administrative costs (figuring out different plans costs consumers and hospitals money, these costs aren't minimized by competition), the cost of 1/sqrt(n) risk, and "bandwagon" risk (if a market plan is particularly advantageous for any given group of people, those people all sign up and "sink the ship," whereas national boundaries largely prevent such movement).
The idea that "insurance" is somehow applicable to a scenario where essentially every participant will need to file multiple expensive claims is extremely silly.
Indeed much of the rising insurance costs appear to be government-mandated purchasing of a highly-regulated service, a la affordable care act. That's just elementary economics. The FDA-imposed regulatory hurdles to medical innovation also drive up costs and protect the price gougers from competition.
I've also looked at https://en.wikipedia.org/wiki/Healthcare_in_Singapore
The problem is, "How do we establish a market that provides medication to patients who may not be able to afford it while still generating enough profit to allow research and development of new drugs 10 years from now?"
Establishing a monopsony doesn't actually solve this problem. It changes the flow of money slightly[0], but it doesn't actually solve the fundamental problem: in the aggregate, R&D costs more than patients are able to provide.
Since we're talking about a national scale, we can't use the argument that adding external money to the system - taxpayer funds - would solve the problem, because the two sets - "Patients" and "Taxpayers" - are the same[1]. The funds are still coming from patients, whether they come in the form of insurance premiums or tax withholdings[2].
[0] but a lot less than most people think! Health insurance in the US already is much more like a monopsony than most people realize.
[1] Technically not exactly the same, but close enough that, economically, they can be treated as one.
[2] One might argue that taxes can vary with income. Aside from the fact that insurance premiums already can (and do) explicitly vary with income, this actually already is the current state: patients on private insurance (and especially the ones with very expensive, luxury health plans) already subsidize patients on public insurance. Changing the system so that we collect these subsidies through tax funds doesn't change the problem (though ironically, it does increase the risk that those funds will be diverted to other government budgets).
It's hard to argue against them because they are doing good (inventing life saving medicines) but the opportunity cost of money paid out as profits instead of reinvested into research must be huge.
[1] https://ycharts.com/companies/VLKPY/gross_profit_margin https://ycharts.com/companies/BAMXY/gross_profit_margin
> Health insurance in the US already is much more like a monopsony than most people realize.
Dead wrong, Medicare part D is hobbled so that the US is not even close to being a half-monopsony, let alone a full monopsony, in the drug market.
> in the aggregate, R&D costs more than patients are able to provide.
R&D is 10-20% of a typical pharma co's budget. Eroom's law says that in the limit you're correct (until we get over the genetic engineering bump), but there's plenty of room to speculate about constant factors. The pharma business is notoriously infested with rent-seeking shenanigans. See: OP.
That's an odd way to phrase it, because it implies that the amount of research being done globally is constant. But it isn't; it's driven by the available funds.
This actually proves my point: a disproportionate amount of the research that happens globally happens in the US[0], and that's because there's enough profit in the US market for companies to conduct that research. If that profit is reduced, then yes, it's possible that the short-term prices would decrease, but at the cost of delaying further discoveries and advances in medicine.
That's not an easy tradeoff to make, precisely because it's unclear which choice benefits patients more. It's a much easier choice for a country that has a small population, or for a country that doesn't contribute that much to the global R&D (because the impact would be smaller), but the US is in neither of those two categories.
> Dead wrong, Medicare part D is hobbled so that the US is not even close to being a half-monopsony (let alone a full monopsony) in the drug market.
I'm actually not referring to Medicare Part D with that footnote, but that's a separate discussion.
[0] The US's share has dropped in the last decade or so, but only because China and India have become even more lucrative.
If one (or both) of those parties is a sovereign state, or if we set arbitrary restrictions on the price and/or quantities traded, that doesn't change the fact that it's a market.
https://www.reddit.com/r/tabled/comments/3q3mwn/table_iama_m...
A couple of greatest hits:
Since a new drug came out that's almost the same as your company's for such a cheap price, how do expect to turn a profit now?
[–]martinshkreli[S] 0 points 16 hours ago
no new drug is FDA approved for toxoplasmosis.
[–]LouisDeFeo 1 point 16 hours ago
You're right, excuse me. I meant when it gets approved, how do you expect to turn a profit?
[–]martinshkreli[S] 0 points 16 hours ago
they're not going to do that. they don't have the resources.
and:
You've said the rise in the cost of Daraprim won't effect most patients because the insurance companies will absorb the cost. Does it not stand to reason though that the insurance companies will pass those cost back along to the policy holders who pay the premiums. How does that argument not perpetuate the problem of out of control medical cost?
[–]martinshkreli[S] -1 points 16 hours ago
It definitely stands to reason. But the other thing to consider is that as more companies generate revenue and profits new companies sprout to compete with them for that profit pool. This keeps costs down.
and:
Money aside, how do you feel about being hated by the world?
[–]martinshkreli[S] 0 points 5 hours ago
It doesn't bother me. My priority is patients and I have a ton of support from them. I don't answer to the media or random internet crazies.
And the winner (appeal to common practice fallacy):
I have a hard time believing this isn't all part of some plan. Stock shorting?
What do we get instead? Shkreli will gain a few hundred million dollars from this scheme, and Millennials will complain about him on message boards.
And don't think that the system is broken because corrupt system is unyielding and impenetrable. It's broken because our generation lacks the constitution (and possibly aptitude) to push for the changes necessary. There has never been an easier place and time to than 2015 USA to enact the changes you want to see. But we're content eating fast food and watching Netflix instead.
If you mean Gen X or Y, that's just wrong. Those two generations basically got Obama elected in 2008 (who got out and canvassed, and ran his Internet campaign and much of his meatspace campaign, and voted), and look what happened: vontinued never-ending war, police brutality on the rise, drug war on the rise, continued mass incarceration and surveillance state, ridiculous Dem/Repub back and forth showmanship, and so forth.
And please don't say we should have picked better in 2008. Who? Clinton? Biden? McCain/Palin? Anyone outside of the two parties has no chance, witness the party Sanders ran under this cycle.
Could it be that we simply see the game is fixed, and simply no longer wish to participate in or implicitly support this system?
> There has never been an easier place and time to than 2015 USA to enact the changes you want to see.
Oh really? Well, such a pliable system sure has proved remarkably impervious to change.
Change is hard. It takes dedication and sacrifice. It takes wit and cunning and luck. But we live in a country where if you go out and try to make those changes, you will not be arrested (for very long) or killed. Your family will not be tortured. In fact, when people do attempt to make changes, our country encourages them. There are very few places in the world where this can be said. And groups dedicated to making changes this way have altered the course of this country. The LGBT community is doing it right now. Racial minorities have done it in the past. Anti-war activists have done it.
But they didn't do it from a place of comfort. It's very hard to make positive changes to society while climbing a corporate ladder.
If you are too scared to disturb the comfort of your current life, and you think the ballot box is all you have control of, then you are the exact type of person I described in my original post. And it's not an insult to you. It's an insult to an entire generation.
Or he would be forced to reveal that he actually is just in this as a common rent-seeker.
This is, truly, a great day for humankind.
Additionally, I wonder if he is doing this on person to make a point about drug pricing in the USA.