A Huge Overnight Increase in a Drug’s Price Raises Protests

[seekerz]

They most certainly WILL manufacture the drug if they can sell it for $350/pill, which would be half the cost of the original maker. They’d make a huge profit AND help out people by providing it at a MUCH lower cost.

I love how your market is merciful to the sick: take a less-than-$20 pill, jack up the price to $700-$800, get competitors to enter the market (somehow, for a drug that is in very low demand) and when these competitors price it at $350 a pill, we can all pat ourselves on the back and sing the praises of “the free market”! I know my math skills are weak, but didn’t we just go from 20 bucks to 350 without passing “GO”?

 

[Theo520]

Supply had not been restricted by government. Supply is low because it is a drug that is not commonly needed therefore little is made and only by one company. Nobody is stopping others from making it - there just isn’t much of a NEED for it.

Correct, the Govt has restricted competition in the US market by not providing a generic alternative to such a critical drug, that is widely available from many other drug companies around the world. They are prevented from selling into the US market

Barring the backlash of public opinion, it was natural to see a price increase.

 

[zz912]

Supply had not been restricted by government. Supply is low because it is a drug that is not commonly needed therefore little is made and only by one company. Nobody is stopping others from making it - there just isn’t much of a NEED for it.

Some in this thread have said that this company has a monopoly on this drug, and foreign manufacturers can’t sell it in the US. If so, that’s a restriction of supply created by govt.

If there is no restriction, then other manufacturers will create the drug if there is the profit margin there. He tries to sell for $700/pill, another will sell for $600, another for $500, and the price war will continue until it reaches proper market levels.

 

[Thorolfr]

Some in this thread have said that this company has a monopoly on this drug, and foreign manufacturers can’t sell it in the US. If so, that’s a restriction of supply created by govt.

If there is no restriction, then other manufacturers will create the drug if there is the profit margin there. He tries to sell for $700/pill, another will sell for $600, another for $500, and the price war will continue until it reaches proper market levels.

Don’t forget that the FDA also has a responsibility to protect the safety of drugs sold in the US. So they can’t just let any foreign manufacturer of a drug sell it in the US unless it has been tested for safety and proven to be equivalent to and just as safe as the drug sold in the US.

 

[Roselle]

I thought this a nice article about the broader problem seen with price hikes for pharmaceuticals. Many firms have done similar, hiking prices sky high after purchasing small drugs firms, they have just been sneaker going about it.

“Dear Martin Shkreli: This Is How You Hike Drug Prices”

zerohedge.com/news/2015-09-28/dear-martin-shkreli-how-you-hike-drug-prices

snippet:

…While the entire US population was shocked, appalled and outraged at Shkreli for daring to boost the price of one drug by 5000%, apparently nobody had a problem with Valeant jacking up the prices of nearly 30 drugs by anywhere between 90% and 786% on the high end, with one solitary outlier, Ofloxacin ear drops seeing its price soar by 2288%.

Valeant’s price increases, or gouging as some would call it, are shown in the chart below courtesy of Citron:

And there you have it: boost the prices of dozens of drugs in the span of 1-3 years anywhere between 100% and 800% and nobody notices (thank you insurance companies). But hike the price of one drug by 5,500% and suddenly all of America thinks you are satan incarnate.

Indeed, as Citron concludes, “In the Twitter-storm furor over Turing’s recent one-drug price gouge attempt, the media has overlooked the reality that Martin Shkreli was created by the system. Shkreli is merely a rogue trying to play the gambit that Valeant has perfected.”

Finally, perhaps the Shkreli-Valeant episode should serve as a wake up call to the US public and the media that “serves” it, and serve to answer the question: just what is the threshold that activates popular aversion - why is it one instance of a grotesque price increase which in the grand scheme of things has a small nominal impact has such a vastly greater impact on the popular psyche over thousands of smaller cases which however when combined, lead to far greater spending on drugs by a far greater group of people… and yet snuck by unobserved for so long.

In any event, absent some massive bribe by the biotech lobby of Congress, the glory days of the biotech bubble are now over…

 

[zz912]

And now we have a followup on this story. It took only one month, and the market has already corrected this problem. No laws were needed, no govt interference was needed, and market forces solved the problem.

theblaze.com/stories/2015/10/23/ex-hedge-fund-manager-who-jacked-up-price-of-drug-by-5000-percent-gets-lesson-in-free-market-capitalism/

Martin Shkreli was widely criticized late last month after his Turing Pharmaceuticals announced an increase in the price of Daraprim - the only approved treatment for a life-threatening parasitic infection — from $13.50 to $750 per capsule after buying rights to sell the drug.

But now the former hedge fund manager has competition.

A San Diego biomedical company on Thursday announced it’s selling an alternate medication to Daraprim for $1 a capsule, the San Diego Union-Tribune reported.

And note, it is govt involvement that hampers this drug maker from making the drug even more available…

 

[Theo520]

So **Capitalism **solved the problem created by a Govt Monopoly

And now we have a followup on this story. It took only one month, and the market has already corrected this problem. No laws were needed, no govt interference was needed, and market forces solved the problem.

theblaze.com/stories/2015/10/23/ex-hedge-fund-manager-who-jacked-up-price-of-drug-by-5000-percent-gets-lesson-in-free-market-capitalism/

Martin Shkreli was widely criticized late last month after his Turing Pharmaceuticals announced an increase in the price of Daraprim - the only approved treatment for a life-threatening parasitic infection — from $13.50 to $750 per capsule after buying rights to sell the drug.

But now the former hedge fund manager has competition.

A San Diego biomedical company on Thursday announced it’s selling an alternate medication to Daraprim for $1 a capsule, the San Diego Union-Tribune reported.

And note, it is govt involvement that hampers this drug maker from making the drug even more available…

 

[Abynissa]

Vilified for drug pricing, CEO Shkreli busted for securities fraud
Reuters NEW YORK | By Nate Raymond and David Ingram

Martin Shkreli, the boyish pharmaceutical entrepreneur who caused a public uproar after he drastically raised the price of a life-saving prescription drug, was arrested on Thursday for engaging in what U.S. prosecutors said was a Ponzi-like scheme at his former hedge fund and a pharmaceutical company he previously headed.

Shkreli, who has become a lightning rod for growing outrage over soaring prescription drug prices, was arrested before dawn at the tony Murray Hill Tower Apartments in midtown Manhattan. Clad in a grey hoodie, the 32-year old could be seen being escorted by a slew of law enforcement, including FBI, into a car…More: