8 ms·

FTA: "It says patients are largely shielded from price increases by insurance and financial assistance programs the company offers, so that virtually no one is

by jbapple 11y ago

FTA: "It says patients are largely shielded from price increases by insurance and financial assistance programs the company offers, so that virtually no one is denied a drug they need. But Mr. Pearson, a former McKinsey & Company consultant, has said he has a duty to shareholders to wring the maximum profit out of each drug." This is the classic coupon strategy to maximize revenue - if you set the price very high but offer discounts to those who can't afford it, you can get more revenue than if you pick a single price that would be less than what some buyers were willing to pay and more than others were willing to pay. In the first example of the article, an older woman (Susan Mannes) had to take on a second job to afford a drug that Valeant increased the price on in order to keep her husband from dying. I don't know what the upper limit is on how much Susan and Bruce Mannes will pay for this drug, but I suspect it is limited only by their current assets. In other words, Valeant could feasibly take everything they own. I don't see a way out of this without regulation, and I don't see that happening when the pharmaceutical industry has been so effective at influencing federal laws.

bwb 11y ago
Agreed, there needs to be some hard regulation here to change his environment. Worst case the government needs to regulate what they charge, and find a way to do that without killing all R&D.
- chrischen 11y ago
  They should go beyond that and punish actors of bad faith.
  - basseq 11y ago
    What's bad faith? If I have a product that someone will pay a million dollars for, why wouldn't I charge a million dollars for it? Because the alternate is death? So what—I'm not a charity. There's a morality question here, and maybe I'm an asshole in this scenario, but being an asshole in of itself isn't a crime.
    - chrischen 11y ago
      Turin did some anti-competitive tactics like block the production of generics. So they weren't just capitalizing on market inefficiency, they were causing it to some degree. That being said, bad faith can simply be determined by a vote, similar to how Uber drivers are expelled if they act in bad faith (bad ratings).
      - basseq 11y ago
        The anti-competitive argument I like. You can take this to a logical legal argument with established roots in precedent and say that the "monopoly" in this case is detrimental to public welfare and spirited business competition.
    - hospes 11y ago
      Being an asshole in this context should be criminalized. If company buys a drug (or owns one), which people need to keep them alive, and it increases prices in orders of magnitude without any business justification, other than making profit, then this should be criminalized. As a society we should decide where to draw the line. If an executive increases price of life saving drug purely to maximize companies profit, knowing that it will lead to death of other people, he should be treated as criminal.
      - basseq 11y ago
        "Making profit" is the #1 business justification. This is in the same vein as, "Other than that, how was the play, Mrs. Lincoln?" What, exactly, do you propose to criminalize? Excessive profits? What is profit? How is it calculated—is it tied to the number of deaths, or just any death? On specific drugs or the company as a whole? Is this healthcare only, or any industry where lives could be at stake? Don't get me wrong, I think this is egregious profiteering, but you can't just point to profit as a bad thing. There was an interesting look at the ethics of search and rescue businesses in Wired earlier in the year, where I see some parallels (as well as a company acting in good faith). [1] http://www.wired.com/2015/08/search-and-rescue-for-sale/ http://www.wired.com/2015/08/search-and-rescue-for-sale/
rdancer 11y ago
The other classic cure to this disease would be competition?
ef4 11y ago
> I don't see a way out of this without regulation, and I don't see that happening when the pharmaceutical industry has been so effective at influencing federal laws. For many of these generic drugs, this is a case where markets have literally already solved the problem. They're available from European and Indian manufacturers at extremely low cost. All we need to do is lower the trade barriers. Remember, these are drugs that are already FDA approved. But the manufacturers can't sell in the US because the ANDA approval process is too onerous.
- jbapple 11y ago
  > For many of these generic drugs, this is a case where markets have literally already solved the problem. They're available from European and Indian manufacturers at extremely low cost. This fixes part of the problem, perhaps. But the article explains that it can take other manufacturers years to ramp up production if they aren't already making the drug. This also doesn't fix the problem for non-generics.
specialist 11y ago
I don't see a way out of this without regulation... Windfall profit taxes. Anyone who posts a profit over 20% forfeits all of their profits. Charge what ever you want. Profit however you wish (monopoly, insider trading, war profiteering, patronage, dumb luck). Government (the people) won't bat an eye. But if you hit the jack pot, you'll wish you hadn't. The only value held more dearly than the cult of Freedom Markets [tm] is notion of fair play. Ridiculous profits offends everyone (not already bought off). As populism goes, windfall profit taxes should be an easy sell.
- mdpopescu 11y ago
  Approximate quote: "every problem has a solution that is simple, obvious and wrong". In this particular case, you just moved the issue to "the company with the most ridiculous definition of what constitutes legitimate expense wins". Which is, if I'm not mistaken, something huge companies already do a lot (and is in fact one reason for the over-inflated price of drug approval in the US).
  - specialist 11y ago
    the company with the most ridiculous definition of what constitutes legitimate expense wins Exactly. What's "economy"? The measure of the movement of money. What's "inequity"? The hoarding of money. We want to grow the economy, by reducing hoarding, by keeping the money moving. We salute companies fudging their profits by padding their expenses. The Freedom Market [tm] zealots have made wealth redistribution via progressive taxation politically infeasible. And, truth be told, it's a lot of paperwork. Taxing windfall profits accomplishes the same thing, by playing to everyone's innate sense of fairness (and compulsion to punish cheaters). We'll cheerfully "help" any company (or person) not smart enough to bury their own profits by administering cashectomies and audits. While I appreciate your effort, a more appropriate quote would be: "If your idea is any good, you'll have to ram it down people's throats." Don't overcomplicate stuff unnecessarily. That's how you disempower yourself. Paralysis thru analysis.

by jbapple 11y ago

bwb 11y ago

Agreed, there needs to be some hard regulation here to change his environment. Worst case the government needs to regulate what they charge, and find a way to do that without killing all R&D.

chrischen 11y ago
They should go beyond that and punish actors of bad faith.
- basseq 11y ago
  What's bad faith? If I have a product that someone will pay a million dollars for, why wouldn't I charge a million dollars for it? Because the alternate is death? So what—I'm not a charity. There's a morality question here, and maybe I'm an asshole in this scenario, but being an asshole in of itself isn't a crime.
  - chrischen 11y ago
    Turin did some anti-competitive tactics like block the production of generics. So they weren't just capitalizing on market inefficiency, they were causing it to some degree. That being said, bad faith can simply be determined by a vote, similar to how Uber drivers are expelled if they act in bad faith (bad ratings).
    - basseq 11y ago
      The anti-competitive argument I like. You can take this to a logical legal argument with established roots in precedent and say that the "monopoly" in this case is detrimental to public welfare and spirited business competition.
  - hospes 11y ago
    Being an asshole in this context should be criminalized. If company buys a drug (or owns one), which people need to keep them alive, and it increases prices in orders of magnitude without any business justification, other than making profit, then this should be criminalized. As a society we should decide where to draw the line. If an executive increases price of life saving drug purely to maximize companies profit, knowing that it will lead to death of other people, he should be treated as criminal.
    - basseq 11y ago
      "Making profit" is the #1 business justification. This is in the same vein as, "Other than that, how was the play, Mrs. Lincoln?" What, exactly, do you propose to criminalize? Excessive profits? What is profit? How is it calculated—is it tied to the number of deaths, or just any death? On specific drugs or the company as a whole? Is this healthcare only, or any industry where lives could be at stake? Don't get me wrong, I think this is egregious profiteering, but you can't just point to profit as a bad thing. There was an interesting look at the ethics of search and rescue businesses in Wired earlier in the year, where I see some parallels (as well as a company acting in good faith). [1] http://www.wired.com/2015/08/search-and-rescue-for-sale/ http://www.wired.com/2015/08/search-and-rescue-for-sale/

rdancer 11y ago

The other classic cure to this disease would be competition?

ef4 11y ago

> I don't see a way out of this without regulation, and I don't see that happening when the pharmaceutical industry has been so effective at influencing federal laws. For many of these generic drugs, this is a case where markets have literally already solved the problem. They're available from European and Indian manufacturers at extremely low cost. All we need to do is lower the trade barriers. Remember, these are drugs that are already FDA approved. But the manufacturers can't sell in the US because the ANDA approval process is too onerous.

jbapple 11y ago
> For many of these generic drugs, this is a case where markets have literally already solved the problem. They're available from European and Indian manufacturers at extremely low cost. This fixes part of the problem, perhaps. But the article explains that it can take other manufacturers years to ramp up production if they aren't already making the drug. This also doesn't fix the problem for non-generics.

specialist 11y ago

I don't see a way out of this without regulation... Windfall profit taxes. Anyone who posts a profit over 20% forfeits all of their profits. Charge what ever you want. Profit however you wish (monopoly, insider trading, war profiteering, patronage, dumb luck). Government (the people) won't bat an eye. But if you hit the jack pot, you'll wish you hadn't. The only value held more dearly than the cult of Freedom Markets [tm] is notion of fair play. Ridiculous profits offends everyone (not already bought off). As populism goes, windfall profit taxes should be an easy sell.

mdpopescu 11y ago
Approximate quote: "every problem has a solution that is simple, obvious and wrong". In this particular case, you just moved the issue to "the company with the most ridiculous definition of what constitutes legitimate expense wins". Which is, if I'm not mistaken, something huge companies already do a lot (and is in fact one reason for the over-inflated price of drug approval in the US).
- specialist 11y ago
  the company with the most ridiculous definition of what constitutes legitimate expense wins Exactly. What's "economy"? The measure of the movement of money. What's "inequity"? The hoarding of money. We want to grow the economy, by reducing hoarding, by keeping the money moving. We salute companies fudging their profits by padding their expenses. The Freedom Market [tm] zealots have made wealth redistribution via progressive taxation politically infeasible. And, truth be told, it's a lot of paperwork. Taxing windfall profits accomplishes the same thing, by playing to everyone's innate sense of fairness (and compulsion to punish cheaters). We'll cheerfully "help" any company (or person) not smart enough to bury their own profits by administering cashectomies and audits. While I appreciate your effort, a more appropriate quote would be: "If your idea is any good, you'll have to ram it down people's throats." Don't overcomplicate stuff unnecessarily. That's how you disempower yourself. Paralysis thru analysis.