NYT: Drug Goes From $13.50 a Tablet to $750, Overnight

[Springfield]

I will tell you one thing balki.

I don't think that health care and capitalism are compatible at all.

[tshile]

I will tell you one thing balki.

I don't think that health care and capitalism are compatible at all.

 

They're fundamentally opposed.

 

Healthcare is not a choice, at least a portion of it is not a choice. Yet a group of people in this country want to run it like it is, making it adhere to a system that is based on competition and by extension choice.

[PeterMP]

This is an evil **** using a loophole in the regulatory net to his advantage.  

 

This drug is no longer under patent, but in order to produce your own version of it, you have to do a detailed study comparing your proposed version of the drug to the existing version of drug already on the market under controlled circumstances.   This evil **** controls all supplies of the existing drug, and refuses to give any other company access to it so that they can make their own version.    Meanwhile, he ups the price from $13.50 to $750 per tablet for the drug, one that is necessary to keep millions of people alive.   

 

This company does no research.   This is all just venture capital piracy.   

 

 

They can't do it right now, and this evil **** will block it as long as he can.   

 

They are building up to doing research.  I don't think there's any doubt that he hopes to create a large successful research based drug company.

 

They've started with these generics, and there initial research attempts appear to be efforts to find new uses for other drugs that they control vs. de novo drug development.

 

What seems really odd to me is that its a perfectly ok principle for insurance companies/medicare to dictate prices to doctors based on the services offered and doctors must go through absurd amounts of paperwork to code their services correctly just to get paid.  But when someone discusses doing anything remotely similar with drug prices that individual may as well be Joseph Stalin himself.

 

Honestly I don't think there's a simple solution to this-- there's a ton of R&D and CapEx that goes into developing a drug and the people who successfully take those risks deserve a reward on the back end.  But it really bugs me that we can't have an intelligent conversation about this without the word 'Communism' popping up.

 

The problem is, with respect to this drug, the relevant company took none of those risks.

[DogofWar1]

This is likely in the top 10 moments where the phrase "There ought to be a law" is appropriate.

 

This guy knows exactly what he's doing.  He bought it, jacked up the price, will reap some money for himself and others, and when the legislative/legal/generic drug market wheels start turning to right his wrong, he'll be long gone, having dumped it and made a quite literal killing off of it.

 

Utter scum.

[PeterMP]

What's the cost/profitability model for drugs that cost, say, $100k per year per patient.

 

Prices of identical drugs in the USA vs Canada vs Europe etc. 'cause if I was selling a product to the Fedderal Government, they would like to know that no-one ielse is getting the same product at a better price.

 

For most of these things, there is data out there, and Pharma is supplying that information.  Complete/complex models are hard to fine, but that's because of the complexity of the situation.

 

Drug prices in multiple markets are in the public domain.  And the US federal government doesn't pay the same price for the same drugs.

 

The VA doesn't pay the same price as Medicare and Medicaid.  Heck, drug companies don't charge individuals the same price for the same drug in the US.

 

Sovaldi isn't a $100K drug, but it is expensive (in the US about $84K sticker price.  In places in India, you can get it for under $1,000).

 

http://www.forbes.com/sites/theapothecary/2014/06/17/the-sovaldi-tax-gilead-cant-justify-the-price-its-asking-americans-to-pay/

 

How much is Gilean going to profit from buying Pharmassets (the company that invented Sovaldi) beyond Sovaldi?  That's going to be a hard number to actually put a figure on.

 

But we can certainly talk about how much it costs for Gilean to buy Pharmassets ($11 billion), how much it costs to make a Solvaldi pill ($130), and things like that.

 

And realistically, Gilean is easily going to make their investment back.

 

The Pharma industry is banking huge profits.

 

That's not really in doubt, and those numbers are in the public domain.

 

http://www.bbc.com/news/business-28212223

 

You don't need more regulation to tell you that.

 

The question is what if anything should we do about it.

[balki1867]

They are building up to doing research.  I don't think there's any doubt that he hopes to create a large successful research based drug company.

 

I don't buy that for a second.  I'm sure he's publicly saying that but his existing business model is way more profitable than one of actually doing R&D, getting FDA approvals and spending significant Capital in building facilities to mass produce drugs to FDA standards.

 

 

The problem is, with respect to this drug, the relevant company took none of those risks.

 

I'm with you on that.  My point was more that we fundamentally are willing to control health care costs when it comes to doctors, but we collectively freak out at the mere suggestion of doing anything like that with pharmaceuticals.  I get that there needs to be an incentive structure for people to innovate and create new drugs, and I fully accept that under any such system guys like this would find ways to exploit it.  But it's absolutely absurd that we can't even explore some basic guardrails on this sort of thing.

[PeterMP]

I don't buy that for a second.  I'm sure he's publicly saying that but his existing business model is way more profitable than one of actually doing R&D, getting FDA approvals and spending significant Capital in building facilities to mass produce drugs to FDA standards.

 

 

 

I'm with you on that.  My point was more that we fundamentally are willing to control health care costs when it comes to doctors, but we collectively freak out at the mere suggestion of doing anything like that with pharmaceuticals.  I get that there needs to be an incentive structure for people to innovate and create new drugs, and I fully accept that under any such system guys like this would find ways to exploit it.  But it's absolutely absurd that we can't even explore some basic guardrails on this sort of thing.

 

He already has (access to) facilities to mass produce drugs based on FDA standards otherwise, this wouldn't be happening.

 

Just because the drug is off patent doesn't mean the FDA doesn't regulate its manufacture.

 

As for the rest, he's hired people to do the research, and he's telling stock holders/the public, they've already completed some research.

 

It doesn't make sense to hire people if he's not going to use them, and if he's lying to stock holders/the public about research that's been done, he's going to be in trouble with the SEC.

 

I doubt that's the case.  He might be unethical, but I don't think he's that dumb.

 

**EDIT**

Actually, looking it is a privately held company and so he doesn't need to worry about the SEC too much so that at least isn't much of an issue.

[Dan T.]

Sometimes the Internet swarm goes overboard with the mass public rebuke and shaming of people who gain quick notoriety.  This might be an exception.  Let the mass public shaming of Mr. Shkreli begin.

 

This, from the NYT article:

 

This is not the first time the 32-year-old Mr. Shkreli, who has a reputation for both brilliance and brashness, has been the center of controversy. He started MSMB Capital, a hedge fund company, in his 20s and drew attention for urging the Food and Drug Administration not to approve certain drugs made by companies whose stock he was shorting.

[DogofWar1]

The thing that makes this so fishy is that Daraprim worked pretty well.  If it wasn't functioning well, there'd be a push for better drugs and therapy, but Daraprim worked pretty well in the current setup.

 

He seems to have taken something that wasn't broken, broke it, then said he'd rebuild it better.

 

Except that thing he broke is sorta vital to the lives of thousands and in the interim while he's "rebuilding," assuming he actually rebuilds, he's gonna make a ton of cash.

[Predicto]

As far as I can tell, he only said he was "rebuilding it better" as spin after he got hit with the bad publicity.  

 

And I hear that Bernie Madoff only stole those billions to draw public attention to shortcomings in financial regulation.   What a public citizen. 

[balki1867]

He already has (access to) facilities to mass produce drugs based on FDA standards otherwise, this wouldn't be happening.

 

That applies to the particular drug he's purchased/producing.

 

Every time his company comes up with a new drug they'll have to get the molecule itself through FDA processes, then come up with a new manufacturing process for that particular molecule where it can be economically mass-produced.  Then when that process is defined, he'll have to control that process so that he's producing drugs to FDA standards.  I'm sure there will be some carry-over but having facilities to produce a certain drug to FDA standards doesn't mean he can produce any drug in the future to FDA standards.

 

I'm seriously not buying this guy's "starting a pharma company" angle for a second. He found a market opportunity and he's exploiting it.

[Corcaigh]

 

The question is what if anything should we do about it.

 

Sounds like the Cost Accounting Standards might be applied to Federal procurement of drugs.

[ExoDus84]

Who cares?  Now that everyone has insurance through the affordable care act, the drugs will get paid by insurance companies.

 

Who will then pass off the costs to patients and taxpayers. They're aren't going to eat it all by themselves.

 

This should be right in Bernies wheelhouse.

 

He could bash Hillary and the GOP over the head with this story for weeks.

 

I read Bernie and Clinton are already on this issue. They're also looking into all major price increases for prescription drugs. A similar story happened with a tuberculosis medication, where prices increase 50x overnight. They caught so much flack, the company gave it back to the seller, which I think was a university.

 

Where is the market for this drug? I am assuming that parasitic infections are not a large market share in the US. Are Non-profits and government agencies the main buyers here?

 

It may help if I read the article.

 

It is a small market here, relatively speaking, which makes this pricks explanation total bull****. He mentioned raising the prices by 5000% was necessary to make an improved version of it. Well, with the small number of people who take this drug, it wouldn't make financial sense to begin with. Nobody else has bothered to try and make a "better version" since it was invented in the 1950's. This guy is full of crap. He's just gouging because he can.

 

This is likely in the top 10 moments where the phrase "There ought to be a law" is appropriate.

 

This guy knows exactly what he's doing.  He bought it, jacked up the price, will reap some money for himself and others, and when the legislative/legal/generic drug market wheels start turning to right his wrong, he'll be long gone, having dumped it and made a quite literal killing off of it.

 

Utter scum.

 

This. He's trash. This seems to be an emerging trend. Biotech companies buying the rights to very particular niche drugs, and then jacking up the prices 100 fold or higher. This guy in particular is already being sued for ethics violations and securities fraud. He's a predatory hedge fund douche.

 

In the end, if we want to help lower healthcare costs, then this practice needs to stop. A piece of regulation should be in order to prevent price gouging like this.

[Corcaigh]

As far as I can tell, he only said he was "rebuilding it better" as spin after he got hit with the bad publicity.  

 

And I hear that Bernie Madoff only stole those billions to draw public attention to shortcomings in financial regulation.   What a public citizen. 

 

And patent troll lawyers are trying to do right by the original inventors of technology.

[Corcaigh]

And here is the douchebag fund manager.

 

Any questions?

 

[Duckus]

Pretty sure I took that drug for a month when I was back-packing around Asia once. Do folks use it as a short term anti-malarial drug?

[Taylor703]

When you're super wealthy you can pretty much do whatever you want.

[Springfield]

And here is the douchebag fund manager.

Any questions?

Oh there are worse. And then read his tweets...

[Larry]

Possible idea to kick around. 

 

Looking at this situation, the only reason this thief thinks he can get away with this, is because he's found a tactical situation in which nobody can undercut his price for several years.  (Because it takes that long to get through the FDA process.) 

 

(And, it's possible that nobody even tries to undercut him.  Because, say Acme Pharm want to undercut him.  They know darned well that if they spend the millions to get approval, and design a process, and set up the factory, then the day they roll the first pill off of the new assembly line, the jerk will put the price back where it was, and pocket all the money me made in the intervening time.) 

 

So, I'm trying to figure if maybe there's something we can do, to lower the barriers to entry that make this kind of theft possible.  (And simultaneously marveling that none of out local Paulians have announced that the real villain, here, is the FDA, and if we just allowed anybody who wanted to, to make any drug they felt like, with no quality control at all, then we would be blessed with Nirvana.) 

 

And I'm wondering: 

 

Should we allow the importation of generic pharmaceuticals?  Maybe only from "reputable" countries like Canada and the EU?  (Don't want any lead-based pharmaceuticals from China.) 

[Duckus]

Just saw on Twitter that he is reducing the price after the backlash. I didn't see any details.

[balki1867]

Should we allow the importation of generic pharmaceuticals?  Maybe only from "reputable" countries like Canada and the EU?  (Don't want any lead-based pharmaceuticals from China.) 

 

I like the idea, but I think its a regulatory nightmare.  We struggle to monitor the supply chain of American companies extending into places like China (think about all the counterfeit stuff loaded with Lead that gets sold in dollar stores here).  I can't imagine the added mess of trying to figure out whether a Canadian/EU pharma company was manufacturing drugs to our standards.

 

I think your assessment of why this guy can get away with this (even though its a very old drug that well past patent) is spot on though.

BTW I can't find the article now, but I read something earlier today that alot of companies that follow this business model are angry at him because he's put a spotlight on the practice as a whole.

[Destino]

He's really something and the sharks at Gawker smell blood. 

 

http://gawker.com/lawsuit-scumbag-pharma-price-gouger-stalked-and-harass-1732357240

 

http://gawker.com/pharmaceutical-greed-villain-martin-shkreli-will-fight-1732104723

[Zguy28]

This is insane.

[Springfield]

He's really something and the sharks at Gawker smell blood.

http://gawker.com/lawsuit-scumbag-pharma-price-gouger-stalked-and-harass-1732357240

http://gawker.com/pharmaceutical-greed-villain-martin-shkreli-will-fight-1732104723

You know, I normally cite gawker for disparaging their subjects, but this guy really deserves it.

[PeterMP]

That applies to the particular drug he's purchased/producing.

 

Every time his company comes up with a new drug they'll have to get the molecule itself through FDA processes, then come up with a new manufacturing process for that particular molecule where it can be economically mass-produced.  Then when that process is defined, he'll have to control that process so that he's producing drugs to FDA standards.  I'm sure there will be some carry-over but having facilities to produce a certain drug to FDA standards doesn't mean he can produce any drug in the future to FDA standards.

 

I'm seriously not buying this guy's "starting a pharma company" angle for a second. He found a market opportunity and he's exploiting it.

 

Well, he's going to need a new FDA approved process and that might or might not require new manufacturing facilities, but he clearly has access to facilities.

 

He was hiring scientists before this new broke out.  In fact, he was hiring clinical study scientists before he even bought the rights to Daraprim.

Possible idea to kick around. 

 

Looking at this situation, the only reason this thief thinks he can get away with this, is because he's found a tactical situation in which nobody can undercut his price for several years.  (Because it takes that long to get through the FDA process.) 

 

(And, it's possible that nobody even tries to undercut him.  Because, say Acme Pharm want to undercut him.  They know darned well that if they spend the millions to get approval, and design a process, and set up the factory, then the day they roll the first pill off of the new assembly line, the jerk will put the price back where it was, and pocket all the money me made in the intervening time.) 

 

So, I'm trying to figure if maybe there's something we can do, to lower the barriers to entry that make this kind of theft possible.  (And simultaneously marveling that none of out local Paulians have announced that the real villain, here, is the FDA, and if we just allowed anybody who wanted to, to make any drug they felt like, with no quality control at all, then we would be blessed with Nirvana.) 

 

And I'm wondering: 

 

Should we allow the importation of generic pharmaceuticals?  Maybe only from "reputable" countries like Canada and the EU?  (Don't want any lead-based pharmaceuticals from China.) 

 

I never really understood this logic.

 

He's selling the drug to Canada (assuming he is because not all drugs we can get are sold to Canada) at a cheaper price because they've told him, we'll buy it for this much or we'll not buy any of it.

 

So the solution to the problem is to have some Canadian pharmacy buy it for that much, sell to Americans (with a mark up so the Canadian pharmacies make money), and then pay to ship it back into the US.

How does that make sense?

 

We're subsidizing the Canadian pharmacy industry.

 

Just pass a law saying that you can't charge more than you are charging Canada.