US pharmaceutical company defends 5,000% price increase

[bilby]

It is perfectly possible for a manufacturer outside the USA to start making this drug and exporting it to the US market. All they need to do is to ensure that their manufacturing facility meets the requirements of the US code of Good Manufacturing Practice for pharmaceuticals (cGMP); that their testing facilities meet the Good Laboratory practice rules; Then they can have the FDA inspect their plant and laboratories; they can develop a formulation and manufacturing process, and have that approved by the FDA; then they can start making tablets, and can apply for the relevant import and export permits (these are probably not required - if the supplier is in a country with MFN status, and as the pharmaceutical in question is not a potential drug of addiction). The entire process could easily be approved in a year, if the FDA decided to fast-track it; but would more likely take about two to five years.

It wouldn't have to be manufactured outside US. The patents have expired, there is no reason the generic form couldn't be done completely within US borders. My understanding is that even the pills sold in India or Europe are made by the same company, and not generics. I could be wrong though.

The stumbling block seems to be that the process to ramp up production is too costly compared to the reward. Why go through 2-5 year certification process, only to produce a cheap generic drug that's only used by small number of patients? The only reason why Turing Pharmaceutical can sell it for $750 a pop is because nobody else is producing it, but for anyone else entering the market the expected price would go back to a few bucks.

Sure; the same basic process applies in the US - with the caveat that most US manufacturing and testing sites are already GMP/GLP certified by the FDA, so it would be a little quicker. But the synthesis of the active ingredient is likely only done at one plant in the US currently; so it is a race to see whether a US plant could get the new process up and running, or whether an existing plant overseas can get certified first.

The real problem is exactly as you have identified - this stuff is so cheap to make, and so expensive to get set up and licensed to make, that the only way for it to be profitable is for it to be a monopoly. Which opens the door to assholes who decide that margins in the 100 - 200% range are not enough, and want to abuse their monopoly position, knowing that the patients cannot simply stop taking the drugs.

In such a situation, there are three choices - 1) Accept the extortion and pay the asshole whatever he demands; 2) Lower the regulatory hurdles until competition becomes viable, and let the market push the price down; or 3) Regulate the price as well as the manufacturing and supply process.

Option 1 is unacceptable for reasons which I hope are obvious. Option 2 opens up the prospect of poor quality and/or fake drugs finding their way to patients; so Option 3 is really the only workable solution - despite the horror that government price controls evoke in the free market evangelists.

This is one area where the free market simply cannot work - customers are not able to determine the quality of the product, because the difference between a tablet that will save your life and a tablet that will do nothing at all (or may even poison you) is only able to be determined by highly skilled people working in a well equipped laboratory. Free markets rely on the customers having at least some way to tell what the quality of the goods is; and with pharmaceuticals, this is really not possible. So some central trusted authority is needed to protect the customers from unscrupulous suppliers.

In an unregulated marketplace, only fake tablets can be sold - because the counterfeiters can always undercut the legitimate suppliers; and the customers have no way to spot the difference between a real product and a fake.

 

[maxparrish]

Why are we discussing this?

We have Obamacare. The government will pay for it so its FREE!

 

[Axulus]

It wouldn't have to be manufactured outside US. The patents have expired, there is no reason the generic form couldn't be done completely within US borders. My understanding is that even the pills sold in India or Europe are made by the same company, and not generics. I could be wrong though.

The stumbling block seems to be that the process to ramp up production is too costly compared to the reward. Why go through 2-5 year certification process, only to produce a cheap generic drug that's only used by small number of patients? The only reason why Turing Pharmaceutical can sell it for $750 a pop is because nobody else is producing it, but for anyone else entering the market the expected price would go back to a few bucks.

Sure; the same basic process applies in the US - with the caveat that most US manufacturing and testing sites are already GMP/GLP certified by the FDA, so it would be a little quicker. But the synthesis of the active ingredient is likely only done at one plant in the US currently; so it is a race to see whether a US plant could get the new process up and running, or whether an existing plant overseas can get certified first.

The real problem is exactly as you have identified - this stuff is so cheap to make, and so expensive to get set up and licensed to make, that the only way for it to be profitable is for it to be a monopoly. Which opens the door to assholes who decide that margins in the 100 - 200% range are not enough, and want to abuse their monopoly position, knowing that the patients cannot simply stop taking the drugs.

In such a situation, there are three choices - 1) Accept the extortion and pay the asshole whatever he demands; 2) Lower the regulatory hurdles until competition becomes viable, and let the market push the price down; or 3) Regulate the price as well as the manufacturing and supply process.

Option 1 is unacceptable for reasons which I hope are obvious. Option 2 opens up the prospect of poor quality and/or fake drugs finding their way to patients; so Option 3 is really the only workable solution - despite the horror that government price controls evoke in the free market evangelists.

This is one area where the free market simply cannot work - customers are not able to determine the quality of the product, because the difference between a tablet that will save your life and a tablet that will do nothing at all (or may even poison you) is only able to be determined by highly skilled people working in a well equipped laboratory. Free markets rely on the customers having at least some way to tell what the quality of the goods is; and with pharmaceuticals, this is really not possible. So some central trusted authority is needed to protect the customers from unscrupulous suppliers.

In an unregulated marketplace, only fake tablets can be sold - because the counterfeiters can always undercut the legitimate suppliers; and the customers have no way to spot the difference between a real product and a fake.

Oh, those dang dirty and impure medicines from Japan and the EU. How do those dirty savages manage to live past 30 when they allow their patients to ingest crap like that?

 

[zorq]

Sure; the same basic process applies in the US - with the caveat that most US manufacturing and testing sites are already GMP/GLP certified by the FDA, so it would be a little quicker. But the synthesis of the active ingredient is likely only done at one plant in the US currently; so it is a race to see whether a US plant could get the new process up and running, or whether an existing plant overseas can get certified first.

The real problem is exactly as you have identified - this stuff is so cheap to make, and so expensive to get set up and licensed to make, that the only way for it to be profitable is for it to be a monopoly. Which opens the door to assholes who decide that margins in the 100 - 200% range are not enough, and want to abuse their monopoly position, knowing that the patients cannot simply stop taking the drugs.

In such a situation, there are three choices - 1) Accept the extortion and pay the asshole whatever he demands; 2) Lower the regulatory hurdles until competition becomes viable, and let the market push the price down; or 3) Regulate the price as well as the manufacturing and supply process.

Option 1 is unacceptable for reasons which I hope are obvious. Option 2 opens up the prospect of poor quality and/or fake drugs finding their way to patients; so Option 3 is really the only workable solution - despite the horror that government price controls evoke in the free market evangelists.

This is one area where the free market simply cannot work - customers are not able to determine the quality of the product, because the difference between a tablet that will save your life and a tablet that will do nothing at all (or may even poison you) is only able to be determined by highly skilled people working in a well equipped laboratory. Free markets rely on the customers having at least some way to tell what the quality of the goods is; and with pharmaceuticals, this is really not possible. So some central trusted authority is needed to protect the customers from unscrupulous suppliers.

In an unregulated marketplace, only fake tablets can be sold - because the counterfeiters can always undercut the legitimate suppliers; and the customers have no way to spot the difference between a real product and a fake.

Oh, those dang dirty and impure medicines from Japan and the EU. How do those dirty savages manage to live past 30 when they allow their patients to ingest crap like that?

So you don't recognize counterfeit drugs as a problem? Or is it that you think the deaths that would occur before the free market removes them are tolerable? It's far better to let people die buying snake oil than live in a world with regulations?

 

[Axulus]

Oh, those dang dirty and impure medicines from Japan and the EU. How do those dirty savages manage to live past 30 when they allow their patients to ingest crap like that?

So you don't recognize counterfeit drugs as a problem? Or is it that you think the deaths that would occur before the free market removes them are tolerable? It's far better to let people die buying snake oil than live in a world with regulations?

I don't recognize counterfeit drugs as a problem in countries like Germany, France, UK, Australia, Japan, Netherlands, Sweden, Norway, Finland, Denmark, etc. The US is not the only country in the world that is able to have safe and effective medicines, you know.

 

[Jimmy Higgins]

Why are we discussing this?

We have Obamacare. The government will pay for it so its FREE!

You misspelled, "I'm perfectly fine with what that piece of shit did."

 

[bilby]

Sure; the same basic process applies in the US - with the caveat that most US manufacturing and testing sites are already GMP/GLP certified by the FDA, so it would be a little quicker. But the synthesis of the active ingredient is likely only done at one plant in the US currently; so it is a race to see whether a US plant could get the new process up and running, or whether an existing plant overseas can get certified first.

The real problem is exactly as you have identified - this stuff is so cheap to make, and so expensive to get set up and licensed to make, that the only way for it to be profitable is for it to be a monopoly. Which opens the door to assholes who decide that margins in the 100 - 200% range are not enough, and want to abuse their monopoly position, knowing that the patients cannot simply stop taking the drugs.

In such a situation, there are three choices - 1) Accept the extortion and pay the asshole whatever he demands; 2) Lower the regulatory hurdles until competition becomes viable, and let the market push the price down; or 3) Regulate the price as well as the manufacturing and supply process.

Option 1 is unacceptable for reasons which I hope are obvious. Option 2 opens up the prospect of poor quality and/or fake drugs finding their way to patients; so Option 3 is really the only workable solution - despite the horror that government price controls evoke in the free market evangelists.

This is one area where the free market simply cannot work - customers are not able to determine the quality of the product, because the difference between a tablet that will save your life and a tablet that will do nothing at all (or may even poison you) is only able to be determined by highly skilled people working in a well equipped laboratory. Free markets rely on the customers having at least some way to tell what the quality of the goods is; and with pharmaceuticals, this is really not possible. So some central trusted authority is needed to protect the customers from unscrupulous suppliers.

In an unregulated marketplace, only fake tablets can be sold - because the counterfeiters can always undercut the legitimate suppliers; and the customers have no way to spot the difference between a real product and a fake.

Oh, those dang dirty and impure medicines from Japan and the EU. How do those dirty savages manage to live past 30 when they allow their patients to ingest crap like that?

The US has decided not to accept other nation's regulators as equivalent to the FDA, without retaining FDA oversight of their manufacturing facilities and methods. In my opinion, this is overkill and is more about protectionism than it is about safety; but it is understandable that they want to maintain control over standards, rather than contracting out that control to other countries. My former workplace was one of a tiny handful of Australian facilities licenced by the FDA to export to the US; the additional regulatory burden was not particularly large, because almost all of the FDA regulations are the same as those of the Australian TGA. The US most certainly does allow imports from other countries - including India - but not in the sense that one can simply fill up a suitcase in Mumbai, fly to New York, and sell the stuff there at a profit.

Your comment in no way addresses my point - if the regulator is the UK's MHRA or the EU's EMA, rather than the USFDA, that in no way implies a lack of regulation, nor a free market. Importing closely regulated pharmaceuticals from other jurisdictions is not a lowering of regulatory hurdles. There are different manufacturers in different jurisdictions, each with a local monopoly. Removing the protectionist elements of the regulatory framework to allow free trade within a closely regulated bloc would simply lead to a larger monopoly within that bloc, for the same reasons that the local monopolies exist today.

 

[Jimmy Higgins]

Seems to be a lot of text to just say, "I support that piece of shit (sp)."

But it doesn't say that. It says something completely different from that. You do not have any reason to believe that it says what you say it says. In the event that you sincerely believe it means I support him then you are willfully deceiving yourself. You are making a false damaging claim about me with reckless disregard for the truth. You are doing it because you have correctly identified me as a political opponent and have decided on that basis that it doesn't matter if you libel me because your enemies aren't entitled to truthfulness.

Actually I remarked as I did because I took your response, which had to have had something to do with the OP as being in support of what the guy did because the posts reading otherwise have been quite clear with their opposition.

I suppose I also assumed you weren't derailing the thread.

A free market is very resilient against this sort of abuse.

Which is why we have anti-monopoly laws and the FDA. Free market babes!!!

 

[maxparrish]

Why are we discussing this?

We have Obamacare. The government will pay for it so its FREE!

You misspelled, "I'm perfectly fine with what that piece of shit did."

I yet to decide how odious what that "piece of shit" did. Regardless of that indecision, it is a bit of a shame that the guy folded so quickly. It would have been interesting to see if other CEOs, organizations, and the twitter mob promised a supplier/consumer boycott might have fully developed into economic pressure - you know, the same "brave" souls who enjoy rolling over bakers and strip mall flag sellers.

In any event, I thought that Obamacare was designed to make sure EVERY plan has every drug available, and that EVERYONE should pay for the consequential premium costs. Does not the benefits of 'one size fits all' mandated insurance work for suppliers, as well as consumers?

Just sayin...

 

[RavenSky]

http://www.bbc.com/news/world-us-canada-34320413

The head of a US pharmaceutical company has defended his company's decision to raise the price of a 62-year-old medication used by Aids patients by over 5,000%.

Turing Pharmaceuticals acquired the rights to Daraprim in August.

CEO Martin Shkreli has said that the company will use the money it makes from sales to research new treatments.

The drug treats toxoplasmosis, a parasitic affliction that affects people with compromised immune systems.

After Turing's acquisition, a dose of Daraprim in the US increased from $13.50 (£8.70) to $750.

. . .

The pill costs about $1 to produce . . .

"These days, modern pharmaceuticals, cancer drugs can cost $100,000 or more, whereas these drugs can cost half a million dollars. Daraprim is still underpriced relative to its peers," [Turing CEO Martin Shkreli] told Bloomberg TV

What a piece of shit that he can say all this with a straight face.

He was a hedge fund manager...

 

[RavenSky]

If that's the case and $750 is overpriced then there are several companies out there that do generic drug lines.

Yup, the free market will eventually take care of it, until then, if you need the drug, you're fucked. God bless America!

Heard about this little shithead yesterday, and first thing I thought is how the capitalist-purists will likely orgasm while praising the fucker.

 

[RavenSky]

In other words, par for the course for JH

This thread is extremely ironic for the free market bashers, as the same time they rail against the free market, they support a law that says "you may not buy that drug from India for $.25/pill or Europe for $1-5/pill, or South America, or Mexico, we are forcing you to buy it from only domestic licenced producers, in which case for this drug we are forcing you to pay $750/pill."

We do?

We don't, but erecting strawmen is the only thing the poor little guy knows how to do, so please forgive him.

 

[barbos]

It's not about cheap indian generics. India does not develop drugs, US does. So if you let Indian drugs in, developments will eventually stop.
At the same time US companies don't spend most of their profits on development, they spend most of it on bribing doctors.
If it was up to me I would legally banned bribing doctors first and then worked on making sure actual research and development gets most of the money.

 

[Metaphor]

I yet to decide how odious what that "piece of shit" did. Regardless of that indecision, it is a bit of a shame that the guy folded so quickly. It would have been interesting to see if other CEOs, organizations, and the twitter mob promised a supplier/consumer boycott might have fully developed into economic pressure - you know, the same "brave" souls who enjoy rolling over bakers and strip mall flag sellers.

Since people don't take tuberculosis drugs for recreation, I'd be interested to learn how a consumer boycott could work in this situation.

 

[marc]

didn't some of the laws against importing of drugs come as a result of people going to Canada to buy drugs made in the US? Because the US is forbidden from negotiating for price, but Canada isn't, people could get them cheaper by going to Canada. I remember that being acted on by the 'free market' republicans.

 

[scombrid]

I don't recognize counterfeit drugs as a problem in countries like Germany, France, UK, Australia, Japan, Netherlands, Sweden, Norway, Finland, Denmark, etc.

We should adopt their medical and regulatory systems eh?

 

[Jolly_Penguin]

Isn't toxoplasmosis the bug that comes from cat dung and causes crazy cat lady syndrome and turns mice suicidal? I've read and heard more interesting stuff about that bug than pretty much anything else this year.

 

[ksen]

Why can't the government manufacture this drug if it's off-patent and there's so few people that need it that there isn't a viable market for it if it were done privately? And when I say "government manufacture" I don't necessarily mean the government sets up its own manufacturing facilities, bidding it out to private manufacturing facilities could work if it were done right.

 

[nightwyrm]

Isn't toxoplasmosis the bug that comes from cat dung and causes crazy cat lady syndrome and turns mice suicidal? I've read and heard more interesting stuff about that bug than pretty much anything else this year.

Yes. Also effects those who have a compromised immune system and the fetus of pregnant women.

 

[barbos]

I don't recognize counterfeit drugs as a problem in countries like Germany, France, UK, Australia, Japan, Netherlands, Sweden, Norway, Finland, Denmark, etc.

We should adopt their medical and regulatory systems eh?

Ha-Ha, you caught him

- - - Updated - - -

Isn't toxoplasmosis the bug that comes from cat dung and causes crazy cat lady syndrome and turns mice suicidal? I've read and heard more interesting stuff about that bug than pretty much anything else this year.

Yes, also undercooked meat can give it to you. And in France 90% of people are infected.