4 ms·

It's a zero sum game though. Raising the price of the drug literally just pulls money out of the system and puts it in his pocket at the expense of everyone els

It's a zero sum game though. Raising the price of the drug literally just pulls money out of the system and puts it in his pocket at the expense of everyone else. It's easy to argue the action is parasitic and adds no value.

BoorishBears 10y ago
To me it seems like a tragedy of the commons, the issue is who will be first to stop extracting value this way. Since no one can be expected to, we need to fix the system that allows it, rather than expecting some altruistic behavior from outfits built to generate profit
- inopinatus 10y ago
  There is no tragedy of the commons here. This is not a shared resource being depleted. The proper descriptor here is rent-seeking[1] and the Turing/Daraprim case lines up with Shiller's "river chain" analogy. [1] https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
  - BoorishBears 10y ago
    Again, this isn't anywhere near my wheelhouse, but I think of money the insurance companies allocate from premiums for drugs as being a shared resource that's being depleted. When the margins that insurance companies have set as targets are brushed up upon, premiums go up and we repeat the process again, except the premiums can't go up forever (right? I wonder if an expert on the subject could confirm) and the system will collapse
    - inopinatus 10y ago
      What you've described is definitely not a commons but a simple pricing outcome for a financial product. In a competitive market you'd expect that price to find an equilibrium, not to rise without bound. Notwithstanding which, this case exhibits none of those characteristics. It is rent-seeking, pure and simple.
- pyre 10y ago
  At the same time, his justifications for how this "only hurts the insurers," and not the end-users aren't exactly right either.
edblarney 10y ago
"It's a zero sum game though" Not quite. Supply and Demand don't quite work that way. Arguably - if someone 'needs it' then they 'must pay' ergo zero sum ... but in reality demands for most drugs is not quite so inelastic (Ambien, opiods etc.). That said, I'm not sure what the drug in question does.
- AbrahamParangi 10y ago
  The drug in question treats a rare degenerative disease of the brain. Precisely the sort of uncompetitive market with inelastic demand that is ripe for exploitation by rent-seeking.
juliangoldsmith 10y ago
>Raising the price of the drug literally just pulls money out of the system and puts it in his pocket at the expense of everyone else. That assumes that he is actually pocketing the money. Shkreli was a hedge fund manager and multimillionaire before starting his pharma companies, and claims he has a $0 salary at Turing. In https://www.youtube.com/watch?v=HXVQOZDKlRE https://www.youtube.com/watch?v=HXVQOZDKlRE , he lays out his reasoning for raising the price of Daraprim to prices near those of similar drugs. He intends to use the money Turing makes from Daraprim to produce drugs that are not, in his words, "terrible".

BoorishBears 10y ago

To me it seems like a tragedy of the commons, the issue is who will be first to stop extracting value this way. Since no one can be expected to, we need to fix the system that allows it, rather than expecting some altruistic behavior from outfits built to generate profit

inopinatus 10y ago
There is no tragedy of the commons here. This is not a shared resource being depleted. The proper descriptor here is rent-seeking[1] and the Turing/Daraprim case lines up with Shiller's "river chain" analogy. [1] https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
- BoorishBears 10y ago
  Again, this isn't anywhere near my wheelhouse, but I think of money the insurance companies allocate from premiums for drugs as being a shared resource that's being depleted. When the margins that insurance companies have set as targets are brushed up upon, premiums go up and we repeat the process again, except the premiums can't go up forever (right? I wonder if an expert on the subject could confirm) and the system will collapse
  - inopinatus 10y ago
    What you've described is definitely not a commons but a simple pricing outcome for a financial product. In a competitive market you'd expect that price to find an equilibrium, not to rise without bound. Notwithstanding which, this case exhibits none of those characteristics. It is rent-seeking, pure and simple.
pyre 10y ago
At the same time, his justifications for how this "only hurts the insurers," and not the end-users aren't exactly right either.

edblarney 10y ago

"It's a zero sum game though" Not quite. Supply and Demand don't quite work that way. Arguably - if someone 'needs it' then they 'must pay' ergo zero sum ... but in reality demands for most drugs is not quite so inelastic (Ambien, opiods etc.). That said, I'm not sure what the drug in question does.

AbrahamParangi 10y ago
The drug in question treats a rare degenerative disease of the brain. Precisely the sort of uncompetitive market with inelastic demand that is ripe for exploitation by rent-seeking.

juliangoldsmith 10y ago

>Raising the price of the drug literally just pulls money out of the system and puts it in his pocket at the expense of everyone else. That assumes that he is actually pocketing the money. Shkreli was a hedge fund manager and multimillionaire before starting his pharma companies, and claims he has a $0 salary at Turing. In https://www.youtube.com/watch?v=HXVQOZDKlRE https://www.youtube.com/watch?v=HXVQOZDKlRE , he lays out his reasoning for raising the price of Daraprim to prices near those of similar drugs. He intends to use the money Turing makes from Daraprim to produce drugs that are not, in his words, "terrible".