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Drug Goes from $13.50 a Tablet to $750, Overnight

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Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#241

Post by nickff »

johansch wrote: post #238
bedhead wrote: post #55

I am a fund manager and I have followed Martin Shkreli since his prior company, Retrophin, went public about two years ago. Simply put, Martin is a sociopathic criminal with a well-established, and consistent track record of deceit, recklessness, failure, and just plain old stupidity. But he is also hyper-aggressive. He is currently living in Switzerland, and it's my understanding that he fled the country in order to…

Isn't this one of those very few cases were nationalisation of a company is called for?

Why do poor business decisions make a case for nationalization?

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#242

Post by anthony_d »

cowsandmilk wrote: post #217
FireBeyond wrote: post #209

Earlier quoted context omitted.

I'm sure he'd be happy to let that go unprotested ... "Skrelicame to attention after his attempts to have the FDA not approve drugs being produced by companies whose stocks he was shorting". Who needs morality in the free market, right?

That is a very biased view of the situation. Pharma companies try to put the best face on data to get a drug approved. Analysts try to approach the data in an impartial way. If an analyst looks at the data and sees issues, it makes sense both ethically and financially to push for the drug not to be approved. Ethically, if the drug doesn't work as advertised, it is better that it is not sold as a cure. Informing the F…

I don't think your view of the situation is any less biased. The problem is that there is very little incentive to ever reject a drug. Shorting is the only case I can think of and even that assumes the drug in question is important enough to actually move share price.

Remember the FDA is primarily concerned with a drug not harming people, the extent to which it's actually beneficial is of secondary interest at best: http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugs...

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#243

Post by refurb »

bedhead wrote: post #96
cmiles74 wrote: post #85

Earlier quoted context omitted.

It seems to me that the overall result would be other companies start manufacturing the generic and sell the drug for maybe 20% less than Martin and over time the price drops back down towards where it once started. In the meantime, this company either goes bankrupt or is sold off. Or the government passes a law capping how much you can raise the price of a generic drug over so many years.

That's the loophole though, the quantities are so small that realistically, no pharmaceutical company has the incentive to make their version of the drug, even at $750 per dose. There are still costs to making a drug that's off-patent, and sometimes the number of patients being treated is only in the double digits. Additionally, a competing drug released at say, $500 per dose would still be considered predatory anywa…

The case of KV Pharmaceuticals that I cited was a little different since compounding labs had already been making the drug Makena. In that case, the FDA actually sent these labs a letter essentially saying, "Go ahead and keep making the drug even though KV now has a patent for it. We are choosing to not enforce their patent because their price increase was bs."

KV never had a patent for Makena. What they did have was "data exclusivity" which meant the FDA could not approve another version of the drug for at least 5 years.

What they were counting on was the FDA clamping down on the compounding pharmacies, since they weren't selling an approved version of the drug.

The FDA, seeing KV's strategy, declined to shutdown the compounders which resulted in KV declaring bankruptcy. KV restructured, reduced the cost of the drug and created a sustainable business. They were acquired by Valeant I believe.

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#244

Post by oneJob »

Unfortunately, this is one of many ways the consumer is being fleeced by the capitalist in the Rx market. I don't use the term "capitalist" to be inflammatory or generically as understood when one says American Capitalism, but rather in the economic sense. Persons who legally own capital and direct its use. Most drug discovery and research / testing is accomplished by academics and governments, and then somehow the capitalists take all the credit and the profits. They have a bunch of different strategies, but they all accomplish roughly the same thing: maximize the $ that ends up in their bank accounts.

This is a must read for anyone interested on the subject: http://www.nybooks.com/articles/archives/2004/jul/15/the-tru...

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#245

Post by ken47 »

drzaiusapelord wrote: post #140
bedhead wrote: post #55

I am a fund manager and I have followed Martin Shkreli since his prior company, Retrophin, went public about two years ago. Simply put, Martin is a sociopathic criminal with a well-established, and consistent track record of deceit, recklessness, failure, and just plain old stupidity. But he is also hyper-aggressive. He is currently living in Switzerland, and it's my understanding that he fled the country in order to…

From an economic and policy perspective, unfortunately, Turing is doing everything right. Makena is probably not a great comparison as its used for prevent early birth, which is something of an edge case for certain pregnant women, versus Daraprim, which is a more common drug. It is the only FDA approved drug for Toxoplasmosis. According to wikipedia: Up to half of the world's population is infected with toxoplasmosi…

From an economic and policy perspective, unfortunately, Turing is doing everything right.

This is an economically misguided point of view. Free market decision-making can only be argued to be optimal in a free market system, which pharma is not, a distinction which the decision-makers certainly were intelligent enough to understand. Free market mechanisms either need to be put in place, or we need to stop allowing its actors to behave as though it were one. As it stands, even from an economics point of view, this sort of behavior is simply immoral.

It gives economics a bad name when you try to argue that such decision-making is economically defensible. It is never economically optimal to make decisions that can directly lead to the deaths of citizens in the host society, in exchange for higher profits. The reading of free market theory with which most people, including its founder, would agree, is one where the goal is to maximize utility, not wealth. This is a vitally important distinction, and one that the layperson often overlooks. Without it, a free market system becomes nothing more than a war of sociopaths. [1]

Sadly, online discussions often degenerate into witch-hunts with the assumption that if we stop this one guy, then everything will be fine.

It's not sad at all. People are understandably outraged, as it is a natural human reaction to such callous life-and-death decision-making. If you truly believe in your statement, I'd reflect on why you are unable to relate to the majority of people around the internet who are very angry about this.

[1] http://www.investopedia.com/articles/economics/09/adam-smith...

[1] https://en.wikipedia.org/wiki/Enlightened_self-interest

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#246

Post by leshow »

ssmoot wrote: post #181
danmaz74 wrote: post #138

Earlier quoted context omitted.

They should just allow importing drugs from other markets that have good enough quality standards - like the EU or Canada I guess. Problem solved.

But who provides the quality standards oversight? The drug is apparently produced in India. What if pills were shipped to the US and it was found after the fact that many batches contained unacceptable levels of iron? Who to blame? I'm sure Canada has decent oversight, but who wants to say that the solution is no direct US agency oversight, and that we want a "Pharmaceuticals-NAFTA"? It seems funding oversight with a…

Did you miss the main caveat? Countries with good quality testing standards. If you have many countries with very similar quality assurance standards then surely it makes sense to rely on the work of others, or have a revised (shorter, cheaper) process for drugs to go through which have already been approved by certain countries.

I don't think anybody is suggesting mass importation of low quality Indian or Thai versions of drugs.

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#247

Post by emodendroket »

monocasa wrote: post #215
emodendroket wrote: post #182

Earlier quoted context omitted.

Why would you assume that in a situation where the entire pharmaceutical industry was nationalized there would not be any more revenue going to those programs? Presumably 1) a government who chose to nationalize them would also direct more tax dollars toward them 2) at least some of the revenue pharmaceutical companies are seeing now would go to government manufacturers instead. This is academic, perhaps, given the l…

Honestly I think single payer healthcare in the US gets you 95% of the way there. At that point the government is in control of most of the revenue to the pharmaceutical companies leaving them in a much better negotiating position. It even makes sense to then bring some of the pharmaceutical production "in house" to cut costs since you're de facto paying for all of the pharmaceutical research anyway.

Medicare would even be in a pretty good negotiating position now if it weren't barred by statute from doing negotiations.

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#248

Post by nickff »

caseysoftware wrote: post #184
bedhead wrote: post #96

Earlier quoted context omitted.

That's the loophole though, the quantities are so small that realistically, no pharmaceutical company has the incentive to make their version of the drug, even at $750 per dose. There are still costs to making a drug that's off-patent, and sometimes the number of patients being treated is only in the double digits. Additionally, a competing drug released at say, $500 per dose would still be considered predatory anywa…

Even though it's $750 per dose now, since they have exclusive control over the market they could decrease it to whatever whenever they wanted to starve competitors.. probably after said competitors have invested in doing it.

This is a possible strategy, but is rarely used, as it is very risky (, it is likely to cost a great deal of market share in the long term). I have looked into it, and found very few examples of a company which tried to lure a competitor into a market, then under-sell them. The opposite (under-sell competition to gain market share then hike prices) also appears to be quite unpopular in the real market, for the opposite reason (it will surely gain market share in the short term, but can cost a great deal of money). These are very popular theories, and there are a few examples of those who have tried both strategies, but those examples are almost all cautionary tales.

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#249

Post by drzaiusapelord »

ken47 wrote: post #245
drzaiusapelord wrote: post #140

Earlier quoted context omitted.

From an economic and policy perspective, unfortunately, Turing is doing everything right. Makena is probably not a great comparison as its used for prevent early birth, which is something of an edge case for certain pregnant women, versus Daraprim, which is a more common drug. It is the only FDA approved drug for Toxoplasmosis. According to wikipedia: Up to half of the world's population is infected with toxoplasmosi…

From an economic and policy perspective, unfortunately, Turing is doing everything right. This is an economically misguided point of view. Free market decision-making can only be argued to be optimal in a free market system, which pharma is not, a distinction which the decision-makers certainly were intelligent enough to understand. Free market mechanisms either need to be put in place, or we need to stop allowing it…

>I'd reflect on why you are unable to relate to the majority of people around the internet who are very angry about this.

The same way I don't relate to the "Obama is a Muslim" narrative on the internet or "9/11 was an inside job" narrative. I think appealing to outrage culture on the internet isn't the bulletproof argument you think it is.

Re: Drug Goes from $13.50 a Tablet to $750, Overnight

#250

Post by ken47 »

drzaiusapelord wrote: post #249
ken47 wrote: post #245

Earlier quoted context omitted.

From an economic and policy perspective, unfortunately, Turing is doing everything right. This is an economically misguided point of view. Free market decision-making can only be argued to be optimal in a free market system, which pharma is not, a distinction which the decision-makers certainly were intelligent enough to understand. Free market mechanisms either need to be put in place, or we need to stop allowing it…

>I'd reflect on why you are unable to relate to the majority of people around the internet who are very angry about this. The same way I don't relate to the "Obama is a Muslim" narrative on the internet or "9/11 was an inside job" narrative. I think appealing to outrage culture on the internet isn't the bulletproof argument you think it is.

I don't think your examples are sufficiently similar to the subject matter to make this a compelling argument.
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