My first thought was generics since it's so old, but this is simply amazing: > With the price now high, other companies could conceivably make generic copies, since patents have long expired. One factor that could discourage that option is that Daraprim’s distribution is now tightly controlled, making it harder for generic companies to get the samples they need for the required testing. > The switch from drugstores t…
What Turing is doing is exploiting the natural monopoly that has formed for this drug. I was able to find only two global producers of this drug after a quick search (Turing and a generic Alibaba listing), which if true means Turing is the only game in town for a lot of supply channels. In addition, the medical market is relatively unable to adapt to these sorts of market fluctuations due to 1. supply chain being slow to respond (high regulation and insurance) 2. high need of patients themselves and 3. lack of knowledge about the drug and alternatives due to the infrequency of its prescription.
What this adds up to is that Turing can buy up the manufacturing of this drug, jack up the price, and pocket the gains for a year or two while the market adapts. Make no mistake, the market will adapt and undercut him and he will destroy his monopoly by doing this, but he will also achieve perhaps many hundreds of percent ROI on his purchase of the drug. Afterwards he can sell the drug to another company and move on to another vulnerable natural monopoly in the drug space.
>“It really doesn’t make sense to get any criticism for this.”
It absolutely does, though. If he's able to exploit a pricing inefficiency as a producer, then the press can exploit him by hanging him out to dry in the public eye. Companies can, and should, face public relations campaigns against them for unethical, if legal, behavior.