4 ms·

>“This is still one of the smallest pharmaceutical products in the world” What Turing is doing is exploiting the natural monopoly that has formed for this drug

by cjlars 11y ago

>“This is still one of the smallest pharmaceutical products in the world” 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.

ikeboy 11y ago
>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. What does bad PR mean for them? Nobody's going to refuse treatment if they would otherwise afford it.
- pixl97 11y ago
  I don't know much about monopolies, but, didn't Microsoft get in trouble for creating one? Also, back in the days of trustbusting were there not penalties for such actions? Is it in anyway against the law to do what they did? I can't answer these questions... but what the eye of the press can do is look deep into all of his practices and if there is anything illegal going on it my get noticed far quicker.
  - ikeboy 11y ago
    Merely making a product that no other companies are interested in making isn't illegal.
  - icebraining 11y ago
    Microsoft got in trouble for using a monopoly in a market (OS) to prop up a product in another market (Browsers), not just for having a monopoly.
  - fnordfnordfnord 11y ago
    >didn't Microsoft get in trouble for creating one? Sort of. Their competitor-plaintiffs are no longer going concerns, and MS are still going relatively strong; so one might argue that the "trouble" was of little consequence. The length of time all of that took to wind its way through the courts means that patients will die waiting for the market/courts to sort itself out.
- learc83 11y ago
  Enough bad PR can mean things like congressional investigations and eventually even regulation.
  - ikeboy 11y ago
    So what specific regulation would fix this? The medical industry is too heavily regulated (see http://fdareview.org/harm.shtml http://fdareview.org/harm.shtml).
    - CydeWeys 11y ago
      Actually, this is perfect evidence that it isn't heavily regulated enough. No one should be allowed to come into an established market, buy up life-saving drugs, jack up the prices hugely for no good reason, and kill those who can't afford the increased prices in the process. This is one of the best arguments for more regulation I can think of. He's a multi-multi-millionaire literally killing people to make even more profit, and he's doing it in an entirely rent-seeking manner that adds no value to humanity whatsoever.
      - ikeboy 11y ago
        Actually, this is perfect evidence that it isn't heavily regulated enough. Technically, both are possible, but you're describing the situation inaccurately: and kill those who can't afford the increased prices in the process. The article says that they're providing the drug for free for those who can't afford it. So no one is dying due to the price being raised. Anyway, one poor outcome doesn't mean more regulation is needed. You need to weigh the costs against the benefits, and when that is done, the costs end out higher, even on the existing regulation regime. Can you propose specific regulations that would fix this, and not cause more harm elsewhere?
- cjlars 11y ago
  It impacts him at the margin. More eyeballs on articles like this one mean a faster market response and more patients doing a little extra digging to find fair treatment for their ailment. He also wouldn't want this article to come up as the top result for his name. A shady business reputation makes it harder to find investors, partners and employees.
  - deleted 11y ago
    [deleted]
  - angdis 11y ago
    Yes, in the short-term, being up written up in the NY times for what they are is the best way to deal with most egregious unethical behavior from scum like Turing Pharmaceuticals. It will be interesting to see if the prices goes back down as a result of this exposure. Sadly, that can't prevent pharma companies from arbitrarily jacking up prices less dramatically on many other drugs and going "under the radar" as far as public outrage is concerned. For that, you need careful and assiduous regulation. But in an era where people run companies that do real things like a hedge fund, I am doubtful things will get better anytime soon.
    - ikeboy 11y ago
      For that, you need careful and assiduous regulation. Do you have any particular proposal to solve the problem? Saying "regulate!" doesn't help unless you can provide specifics.
oconnor663 11y ago
This monopoly doesn't sound very natural.
- zo1 11y ago
  Nor does the phrase "natural monopoly". If I didn't know better, I'd say it was a phrase that was post-created in order to be a "valid" argument against a free-markets ability to self-correct without the presence of a state.
- acveilleux 11y ago
  When someone first dredged up the rights for this drug, it sold 667,000$ worth of pills every year for 1$ each. GlaxoSmithKline produced it and it just wasn't worth the trouble to discontinue or to muck about with. No one would make a generic because it would be more expensive to enter the market than profits could be realized. So the monopoly is natural because no one with any good sense would consider competing. That GSK sold the rights to this drug (and quite possibly other similar drugs) to some other company in a rational bid to monetize inefficient assets and increase shareholder value has upset that monopoly but Turing just needs to exploit the market until the generics show up. That and the price they paid explain Turing's strategy.
richdougherty 11y ago
Another way to restrict competition is to stop competitors getting samples of your drug. Without samples of the original, it's impossible to prove a generic is equivalent. Here's an example where patient safety rules were used to stop competitors getting samples: http://marginalrevolution.com/marginalrevolution/2014/09/co-opting-regulation-for-profit.html http://marginalrevolution.com/marginalrevolution/2014/09/co-...
- bhickey 11y ago
  > Without samples of the original, it's impossible to prove a generic is equivalent. I know we're in FDA-land where logic doesn't rule, but this beggars belief. This is similar to the nonsense by which HFA inhalers knocking generic CFC inhalers off the market. Any competent organic chemist can tell you if you've got pyrimethamine or not. This isn't some exotic chemical. There's published spectra (http://webbook.nist.gov/cgi/cbook.cgi?ID=C58140&Mask=80 http://webbook.nist.gov/cgi/cbook.cgi?ID=C58140&Mask=80). Having a competitor's drug will simply tell you anything new. If it does, they've behaving deceptively.
  - refurb 11y ago
    It's not just having the right drug, it's having the right pharmacokinetics. You need original samples so you can see how the drug dissolves, enters the bloodstream and is metabolized. The FDA has a requirement that generics are bioequivalent, not just the same drug.
  - kgwgk 11y ago
    "One way scientists demonstrate bioequivalence is to measure the time it takes the generic drug to reach the bloodstream and its concentration in the bloodstream in 24 to 36 healthy, normal volunteers. This gives them the rate and extent of absorption-or bioavailability-of the generic drug, which they then compare to that of the pioneer drug. The generic version must deliver the same amount of active ingredients into a patient's bloodstream in the same amount of time as the pioneer drug." http://www.fda.gov/Drugs/EmergencyPreparedness/BioterrorismandDrugPreparedness/ucm134444.htm http://www.fda.gov/Drugs/EmergencyPreparedness/Bioterrorisma...

by cjlars 11y ago

ikeboy 11y ago

>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. What does bad PR mean for them? Nobody's going to refuse treatment if they would otherwise afford it.

pixl97 11y ago
I don't know much about monopolies, but, didn't Microsoft get in trouble for creating one? Also, back in the days of trustbusting were there not penalties for such actions? Is it in anyway against the law to do what they did? I can't answer these questions... but what the eye of the press can do is look deep into all of his practices and if there is anything illegal going on it my get noticed far quicker.
- ikeboy 11y ago
  Merely making a product that no other companies are interested in making isn't illegal.
- icebraining 11y ago
  Microsoft got in trouble for using a monopoly in a market (OS) to prop up a product in another market (Browsers), not just for having a monopoly.
- fnordfnordfnord 11y ago
  >didn't Microsoft get in trouble for creating one? Sort of. Their competitor-plaintiffs are no longer going concerns, and MS are still going relatively strong; so one might argue that the "trouble" was of little consequence. The length of time all of that took to wind its way through the courts means that patients will die waiting for the market/courts to sort itself out.
learc83 11y ago
Enough bad PR can mean things like congressional investigations and eventually even regulation.
- ikeboy 11y ago
  So what specific regulation would fix this? The medical industry is too heavily regulated (see http://fdareview.org/harm.shtml http://fdareview.org/harm.shtml).
  - CydeWeys 11y ago
    Actually, this is perfect evidence that it isn't heavily regulated enough. No one should be allowed to come into an established market, buy up life-saving drugs, jack up the prices hugely for no good reason, and kill those who can't afford the increased prices in the process. This is one of the best arguments for more regulation I can think of. He's a multi-multi-millionaire literally killing people to make even more profit, and he's doing it in an entirely rent-seeking manner that adds no value to humanity whatsoever.
    - ikeboy 11y ago
      Actually, this is perfect evidence that it isn't heavily regulated enough. Technically, both are possible, but you're describing the situation inaccurately: and kill those who can't afford the increased prices in the process. The article says that they're providing the drug for free for those who can't afford it. So no one is dying due to the price being raised. Anyway, one poor outcome doesn't mean more regulation is needed. You need to weigh the costs against the benefits, and when that is done, the costs end out higher, even on the existing regulation regime. Can you propose specific regulations that would fix this, and not cause more harm elsewhere?
cjlars 11y ago
It impacts him at the margin. More eyeballs on articles like this one mean a faster market response and more patients doing a little extra digging to find fair treatment for their ailment. He also wouldn't want this article to come up as the top result for his name. A shady business reputation makes it harder to find investors, partners and employees.
- deleted 11y ago
  [deleted]
- angdis 11y ago
  Yes, in the short-term, being up written up in the NY times for what they are is the best way to deal with most egregious unethical behavior from scum like Turing Pharmaceuticals. It will be interesting to see if the prices goes back down as a result of this exposure. Sadly, that can't prevent pharma companies from arbitrarily jacking up prices less dramatically on many other drugs and going "under the radar" as far as public outrage is concerned. For that, you need careful and assiduous regulation. But in an era where people run companies that do real things like a hedge fund, I am doubtful things will get better anytime soon.
  - ikeboy 11y ago
    For that, you need careful and assiduous regulation. Do you have any particular proposal to solve the problem? Saying "regulate!" doesn't help unless you can provide specifics.

oconnor663 11y ago

This monopoly doesn't sound very natural.

zo1 11y ago
Nor does the phrase "natural monopoly". If I didn't know better, I'd say it was a phrase that was post-created in order to be a "valid" argument against a free-markets ability to self-correct without the presence of a state.
acveilleux 11y ago
When someone first dredged up the rights for this drug, it sold 667,000$ worth of pills every year for 1$ each. GlaxoSmithKline produced it and it just wasn't worth the trouble to discontinue or to muck about with. No one would make a generic because it would be more expensive to enter the market than profits could be realized. So the monopoly is natural because no one with any good sense would consider competing. That GSK sold the rights to this drug (and quite possibly other similar drugs) to some other company in a rational bid to monetize inefficient assets and increase shareholder value has upset that monopoly but Turing just needs to exploit the market until the generics show up. That and the price they paid explain Turing's strategy.

richdougherty 11y ago

Another way to restrict competition is to stop competitors getting samples of your drug. Without samples of the original, it's impossible to prove a generic is equivalent. Here's an example where patient safety rules were used to stop competitors getting samples: http://marginalrevolution.com/marginalrevolution/2014/09/co-opting-regulation-for-profit.html http://marginalrevolution.com/marginalrevolution/2014/09/co-...

bhickey 11y ago
> Without samples of the original, it's impossible to prove a generic is equivalent. I know we're in FDA-land where logic doesn't rule, but this beggars belief. This is similar to the nonsense by which HFA inhalers knocking generic CFC inhalers off the market. Any competent organic chemist can tell you if you've got pyrimethamine or not. This isn't some exotic chemical. There's published spectra (http://webbook.nist.gov/cgi/cbook.cgi?ID=C58140&Mask=80 http://webbook.nist.gov/cgi/cbook.cgi?ID=C58140&Mask=80). Having a competitor's drug will simply tell you anything new. If it does, they've behaving deceptively.
- refurb 11y ago
  It's not just having the right drug, it's having the right pharmacokinetics. You need original samples so you can see how the drug dissolves, enters the bloodstream and is metabolized. The FDA has a requirement that generics are bioequivalent, not just the same drug.
- kgwgk 11y ago
  "One way scientists demonstrate bioequivalence is to measure the time it takes the generic drug to reach the bloodstream and its concentration in the bloodstream in 24 to 36 healthy, normal volunteers. This gives them the rate and extent of absorption-or bioavailability-of the generic drug, which they then compare to that of the pioneer drug. The generic version must deliver the same amount of active ingredients into a patient's bloodstream in the same amount of time as the pioneer drug." http://www.fda.gov/Drugs/EmergencyPreparedness/BioterrorismandDrugPreparedness/ucm134444.htm http://www.fda.gov/Drugs/EmergencyPreparedness/Bioterrorisma...