Drugmakers hiked prices 1k% in price-fixing scheme, states allege | Hacker News Reader

Drugmakers hiked prices 1k% in price-fixing scheme, states allege

arstechnica.com

117 pointsnerdponx34 comments

> "We have hard evidence that shows the generic drug industry perpetrated a multi-billion dollar fraud on the American people,"...

So, force them to reset prices. Don't slap them on the wrists with easily paid fines. Make them reset prices.

And put some people behind bars as well.

Any fines should be per-share. Like $10 per share or whatever. That's the only way a fine is going to make any difference.

There is a serious issue with price fixing in pharma. Whether it's generics colluding, fake patent extensions, or name brand producers paying off generic; it needs to stop.

The current practice is to mark drugs up sky high and rebate the prices. Maybe someone can educate me, but it looks very similar to money laundering IMHO.

It certainly helps that the U.S. government can't negotiate Medicare prices, too.

If there ever was a clear case for a law that should be revoked, it's that one. The whole point is that you can negotiate prices and make medical care cheaper for everyone. Banning that is the clearest evidence that the system is designed to increase corporate profits, not heal people.

There is currently an anti-kickback statute in place that protects rebates. Big news is that this might change this year or next year, rebates are paid at point of sale to consumers. Insurance premiums would rise, so non-utilizers see an increase in cost, and very high utilizers see a reduction (rebates primarily on high cost brand drugs).

Submission statement of sorts: the NYT article for this was submitted twice in the last two days but got no attention; the pharmaceutical industry seems to be a topic of interest here (including some non-mainstream views on characters like Martin Shkreli), so I'm interested to see HN's take on this.

It’s important to note that this case is for generic drugs, not brand name drugs. The expensive drugs that make the news are generally the branded kind. Generic drugs are usually very cheap due to the level of competition.

Interestingly, the US has some of the cheapest generic drug prices in the world due to the level of competition. I had read that for some generic companies, they make almost 100% of their profit by wining patent cases. Once competition ramps up, their margin is razor thin.

So based on that, I guess it’s not that surprising companies would collide in order to improve margins.

Can you please share where you read that "the US has some of the cheapest generic drug prices"?

My mom, who lives in a southeast asian country, came to visit me in the US last month and I asked her to buy generic antibiotics; ear drops; artificial tear drops; generic antihistamines; and they all are much cheaper than what I would have paid here (and are equally effective in a way that I've been weathering fine in this allergy season with these drugs). My significant other, who is from the same country as I, is a medical resident in the US and she still orders meds from her parents.

This is a complicated one: US generics are vastly more expensive than international generics, but at least part of that is because US manufacturers sell those drugs abroad at the cost of production, making up their remaining costs in the US. People in the industry have described it to me as a tactic of "we help people in need, please don't regulate us".

This isn't the whole story; east Asian manufacturers also produce cheaper products, for a bunch of reasons from lower costs to lower regulation to lower profits. And it's notably not the case for non-essential, non-basic medicines (e.g. most psychiatric meds), expensive new generics not used abroad, and certain other high-demand generics like insulin. Those are either expensive everywhere, or more expensive in the US than other wealthy countries and largely unused in poorer countries. (How all this relates to your story depends a lot on whether we're talking about Bangladesh or Taiwan.)

But as far as generic antibiotics or antihistamines, it's going to be hard to separate "US manufacturers overcharge" from "US manufacturers sell cheap abroad".

> US manufacturers sell those drugs abroad at the cost of production

Not everyone agrees with that statement.

First of all, purchasing negotiations are all secret. US manufactures could very well be saying one thing, and doing another.

Donald Trump said something along those lines some time ago, calling EU "Freeloaders". There is a Wall Street Journal article echoing his comments.

Here's an answer from EU's Health Commissioner Vytenis Andriukaitis:

https://sciencebusiness.net/news/drug-prices-row-eu-health-c...

tl;dr: according to him, Trump was just lying.

I should have been clearer about "abroad"; I didn't mean Europe. Trump is referencing the claim that Americans pay for drug development and Europe gets cheap products from it, which is dubious at best. And I don't think US-developed medicines are being sold at-cost there, even if they are cheaper.

What I'm talking about is medicines that are donated, sold with differential pricing, or assigned 'voluntary licenses' to increase medical access in underdeveloped countries. Voluntary license medicines are required to be produced with substantially different appearances from their developed-nation analogues, specifically so that they won't be exported back to undercut those products.

All of those programs are fundamentally good things which save lives, but they lead to some pretty strange outcomes and in turn strange reporting. It can be vastly cheaper to obtain a medicine in an underdeveloped country with supply shortages than in the first world, and that sometimes also prompts articles saying that such-and-such a medicine "only costs 10 cents in other countries!" As far as I know, this is mostly an issue in the US; most other high-differential-price countries have socialized healthcare or other functional solutions like Singapore's, but the US has a lot of extremely poor people who end up paying much higher prices than equally impoverished people abroad.

https://apps.who.int/medicinedocs/documents/s17815en/s17815e...

I should clarify that with "cheaper generic drug prices compared to other western countries".

By comparison, the United States has historically had low generic drug prices and high rates of generic drug use (84% in 2013), but has in recent years experienced sharp price increases for some off‐patent products.[1]

[1]https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5594322/

Do you have some example prices for comparison? Most of us have no idea what generic drugs cost outside of the US.

It's surprising in light of the prevailing idea that markets enforce competition towards the lowest price. This idea forms the basis of the claim that market-driven healthcare benefits consumers by lowering costs.

it is a very elementary idea that applies to few real life markets. things are more complicated than what your learn in basic economics

> applies to few real life markets

It applies to almost all real-life markets. It's so standard that we don't even notice it happening, and focus on the exceptions. There is no level of economics you can reach where "competition drives down prices" stops being taken seriously; Nobel-winning left-wing economists like Stiglitz and Krugman accept that as true and relevant. So does Marx(!), who focuses on how lower costs are achieved at the expense of workers rather than capital holders.

Restaurants run at effectively zero margin. Lawn chairs and pencils and window blinds sell for essentially the cost of manufacturing and distribution. Even complex services like VOIP calling have moved from high profitable industries to "essentially free". Markets aren't inherently noble any more than they're inherently evil, but a major part of their value is that price-fixing hardly ever works.

Without appreciating that, we lose sight of just how strange healthcare (and college, and housing) are. When prices stay far above costs despite what presents itself as competition, there's something significant happening that deserves more attention.

In almost all markets competition produces pressure towards consolidation and monopolization. You need strong regulation to keep things competitive

I appreciate this submission; it's a story that challenges a number of my views, which I think are relatively common around HN.

Broadly, I've thought that high drug prices in the US stem from a mix of our bizarre insurance system (which rewards 'ambitious' pricing) and regulation. For name-brand drugs, that's largely patent protections, but even for generics it happens via process patents, high filing-fee barriers to enter markets, and regulatory delays to start production. (See e.g. here: https://slatestarcodex.com/2019/04/30/buspirone-shortage-in-...)

I still believe those things are issues. But this story has pushed me to revise how much I think those things matter relative to outright price manipulation. And if the answer is (as I suspect) that clumsy regulation raises costs some everywhere, but gouging raises costs massively for some drugs, then the question of how to fight both problems at once is exceedingly difficult. The only way to escape these sorts of tradeoffs is usually "make better regulations", and it's not clear how we make that happen.

I would say exemplary action would help.

Take 4 or 5 of these criminals, strip them of their fortunes, let the press take many pictures of them handcuffed and going to jail, where they will be for 10 years. Also, force the companies to price the drugs accordingly.

If we repeat this enough, I'm sure the problem will magically solve itself and suddenly the companies will be able to cope with clumsy regulation just fine.

They should levy punitive measures in the hundreds of billions of dollars and go back to old pricing.

Fuck em - just buy overseas knock offs. If they're going to abuse the system I have no qualms about abusing it as well. China is happy to make generic knock-offs and sell them at a fair market price.

That a person buying medicine for personal use from abroad could be considered 'abuse', just goes to show how sickeningly skewed in favor of corporations the system is.

There was recently a story on HN of a journalist's home raided to identify his source. Perhaps that is the kind of system abuse that is called for - sending SWAT teams to the homes of each of the CEOs, board-members, and major shareholders, and ransacking them for any signs of wrongdoing, while holding the accused in handcuffs.

It happens every day to regular people for non-violent crimes in the US. Why should the rich have a different law-enforcement system? Yet this call for equal treatment sounds almost extremist...

The whole industry needs to be nationalized, full stop, and the current people in charge need to all be in jail.

Yes, put this in the hands of the same bureaucrats that allow this sort of thing to happen without penalty in the first place. That sounds like a fantastic idea.

It’s not like it doesn’t work in other countries (see France).

So they're taking a playbook page out of pharma bro Shkreli.

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