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

nytimes.com

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

#361

Post by shawn-furyan »

frogpelt wrote: post #279
ben_bai wrote: post #121

Well, in german there is one word describing how to calculate something like this: "Leidensdruckanalyse". It's a dark word, because it basically means: Why give people drugs for $13.50 if the disease is horrible enough that they will, in the long run, accept $750 to ease the pain or to not die. We have laws preventing something like this, but then the industry just has to invent a "new" drug (basically the old one wi…

You may view it as sad. But I think two things are happening: 1. The price of the drug was artificially deflated. 2. The somewhat-free market is deciding how to handle the correction. If the market for this drug was interfered with and the price was not allowed to go up, who's to say the manufacturer couldn't just discontinue the product? Would that help?

In large the drug market is inflated, not deflated, because so many consumers don't pay anywhere close to sticker price out of pocket. Accordingly, one has to be careful in ascribing typical free market motives to either supply or demand side actors. In this case, I think that with such price hikes, one would expect a further than observed decline in demand. We don't see this because so much of the consumer side is completely insensitive to price. Essentially more than half of the market spends as if they were multi-millionaires, and Turing is arbitraging this market inefficiency. I really think that typical free market mechanisms are completely overwhelmed in this case.

Therefore it's impossible to say whether the long tail drugs that Turing is marketing would be considered under-priced in a free market. We can only say that in the current consumer-price-sensitivity short circuited market that the large pharma companies think that there are more profitable areas to put their energy than long tail drugs. And looking at it from their perspective, this seems fairly obvious. First off, these drugs represent a small part of the market. Also, even if they do covet Turing's margins, competing with Turing would diffuse the monopoly mechanism that enables Turing to secure these margins. The Nash equilibrium then would seem to be not to bother.

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

#362

Post by anigbrowl »

elliottcarlson wrote: post #123
fnordfnordfnord wrote: post #107

Earlier quoted context omitted.

We put a food processor who knowingly shipped tainted food in prison?

http://www.cnn.com/2015/09/20/us/peanut-butter-salmonella-tr...

Thanks - did not know about that case and am surprised and gratified to see it prosecuted.

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

#363

Post by elektromekatron »

nickff wrote: post #352
zem wrote: post #337

Earlier quoted context omitted.

would you complain about the state simply setting up a plant to manufacture and distribute a generic version of the drug, thereby driving the predatory company out of business? that seems like it would be an ideal solution that doesn't involve forcibly taking anything away from anyone.

I would have no moral objections to an alternative producer being set up (by the government or anyone else), so long as nobody is forced to buy from either one. There may be some practical issues (such as the regulator being a member of the same organization as the regulated producer), or issues with the scope (and scope creep) of the project, but those are only related issues.

So you could be in favor of nationalisation, by way of making it common property, of the IP that supports his business, but not nationalisation of the business itself.

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

#364

Post by codexon »

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…

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.

I would argue that human life is not limitless in utility and the free market establishes a price range on it.

Like it or not, there is a price tag on the utility of a human life. If you need to spend 100k per year on drugs to live and you cannot make 100k per year, then the free market has decided that your life is not worth the cost because you are not creating 100k worth of value to trade 100k worth of drugs you are taking out of the market.

I don't think it is reasonable to say that a market in which you arbitrarily decide that a human life has unlimited utlity is a "free" market at all. We can all agree that jacking up the price of a life-saving drug to save more money is despicable, but we would be lying to ourselves if we pretended this wasn't part of the free market.

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

#365

Post by x0ra »

ksk wrote: post #224
cmiles74 wrote: post #73

Earlier quoted context omitted.

I think that it's a perfectly valid solution to the problem of being a business or corporation of making more money. I think it's a mistake to believe that ethics is a big part of that equation and I think history backs me up on that. For sure, I'd like these organizations to be more ethical but I also understand that can often get in the way of their primary goal, which is make more money. I don't believe it's ethic…

>I think it's a mistake to believe that ethics is a big part of that equation Yeah, so it also used to be merely unethical to lie about your business' finances. Its illegal now. Ethics IS a big part of the equation. In fact ethics have been integrated into the laws themselves. >history backs me up on that What? History also "backs you up" that exterminating an entire group of people is "valid".

but it's not currently illegal, so you're point of view is irrelevant.

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

#366

Post by x0ra »

ZenoArrow wrote: post #82
rodionos wrote: post #61

As much as my compassionate side is siding with hospitals and patients, the company should be allowed to charge any price it considers reasonable for its product. Also I didn't like the inconspicuous ad hominem attacks on the supply-side players. The side-effect is that it leads the reader away from a subtle observation that the fair market controls to prevent these policies are simply missing and regulators have don…

Should they be able to charge whatever they want when they have no competition? Isn't that against the whole free market ethos? The logic being followed by this particular pharmaceutical company is that because it's a niche market the impact of these large price hikes is minimal. However, the impact is not minimal for those that depend on the drug, who are getting stiffed, either left with prices they may not be able…

> Should they be able to charge whatever they want when they have no competition? Isn't that against the whole free market ethos? of course not.

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

#367

Post by anigbrowl »

logicallee wrote: post #351
anigbrowl wrote: post #343

Earlier quoted context omitted.

I didn't downvote but I do disagree with you. It's a blunt opinion, but one supported by reference to the article and to the cited litigation, from someone with meaningful perspective as a professional investor - in the same way I'd be OK with a professional crypto researcher saying 'Product X is blatantly insecure, and Software Company Y is dishonest when it claims otherwise,' or any number of other contexts. I'm wi…

I have absolutely no objection to the opinion and said about three times that I was glad to have read it. The exact same opinion can be worded in different ways. It's not about being diplomatic, it's about being informative versus inflammatory. If you try to read it literally what does "one of the most unique scumbags I've ever come across" mean exactly? It's not possible to translate this into an informative stateme…

I found it meaningful insofar as the the poster was locating the subject far out on the tail of a normal distribution, and I've had enough contact with the hedge fund world to have a sense of the distribution in question (and how people express themselves in that social context). I do see your point but I guess we have different communication styles as I found the use of language more informative than inflammatory. De gustibus, non est disputandem.

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

#368

Post by pen2l »

anigbrowl wrote: post #335
rayiner wrote: post #233

Earlier quoted context omitted.

What's more ethically questionable: spending billions in capital developing drugs to save lives, and trying to make money off that, or spending billions of capital on endeavors like entertainment services that don't save lives at all?

You know better than that. Have some more coffee.

Don't do that, that's a cop-out. Please answer the question directly. And, it's really not clear if everyone "knows better than that". Clearly state what is the "better" explanation (seriously, I'd love to hear the explanation), don't suggest he needs coffee or whatever -- that adds absolutely nothing of value to the conversation.

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

#369

Post by dlss »

JulianMorrison wrote: post #137
mason240 wrote: post #131

Earlier quoted context omitted.

They are directly comparable. New drugs don't materialize out of thin air any more than the iPhones or any other applications of basic internet protocols did. Imagine if in the early 90s we had stiffed cellular phone technology because "only the rich have access to it" or general internet/network technology because "only banks and giant corporations have access to it." Thanks to capitalism, the technology is now so p…

New drugs come from universities, and from people motivated by the combination of public-spiritedness and academic success. Tax would pay their grants, tax would fund the trials, and tax would fund the production and packaging. Do roads and public water sanitation materialize out of thin air?

> New drugs come from universities, and from people motivated by the combination of public-spiritedness and academic success.

Ahh, hmm, I'm wanting to ask if you know anyone working on drugs without sounding rude.

In my experience they are like doctors. Lilly researchers do enjoy the thought of helping people, but mostly in the abstract. In the concrete they like complaining about people and regulation :) they also very much like living the "good life".

I'm not saying we'd lose all drug researchers if it were nationalized, but I do think we'd lose a lot of them -- at the end of the day, most people do want money, and end up being motivated to pursue careers which are financially rewarded. A full time doctors without borders just wouldn't work IMO.

As to the claim that drugs come from universities... You can take an interesting research finding and turn it into a potential drug... but there's a tremendous amount of work remaining, which isn't particularly interesting / researchy, and still requires someone very smart to do it. Essentially the more financially motivated people in academia are the ones who volunteer for what is often a fool's errand (a failed drug). I think the "new drugs come from universities" position is also true in the sense that "biologists get degrees from university" -- but as others pointed out, that sense is true for all industries.

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

#370

Post by ken47 »

codexon wrote: post #364
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…

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. I would argue that human life is not limitless in utility and the free market establishes a price range on it. Like it or not, there is a price tag on the utility of a human life. If…

I suppose the statement you are latching onto is where I said that it is never economically optimal to allow someone to die in exchange for higher profit, so allow me to clarify.

In this case, it seems nearly impossible to make a concrete case that links this monopolistically-determined price increase to something that comes close to morally justifying the potential loss of human lives.

And as we know, pharma is not a free market in general, and is certainly not in this specific case, so the idea of the free market setting the price on lives seems inapplicable here.

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