4 ms·

While in general I agree with you that is not the case here. The drug's patent expired decades ago. The issue is that there is only 1 US manufacturer giving the

by harryh 9y ago

While in general I agree with you that is not the case here. The drug's patent expired decades ago. The issue is that there is only 1 US manufacturer giving them pricing power. It's unclear to me why another drug manufacturer doesn't come in and undercut the price. This is what happens in most other industries. My gut suspects the arduous FDA approval process, but I have no real evidence for this hypothesis.

gizmo 9y ago
Because there is no price the competitor can charge that the original supplier can't match. There is no profit to be made, unless there is only a single manufacturer. Also, it's difficult to acquire approval needed from the FDA to demonstrate the new drug is safe and equivalent to the already approved because the original producer won't cooperate and provide relevant samples to their competition so they can demonstrate equivalence.
- harryh 9y ago
  Because there is no price the competitor can charge that the original supplier can't match. This is a commonly cited reason but I don't buy it. They're selling these things for 4 cents in tanzania so we're talking about something that is practically free to make. There are lots of things that cheap where we see competition in the US: paperclips, reams of paper, chewing gum, whatever. Why is there competition for these things but not cheap drugs?
  - edko 9y ago
    Maybe the market in the US isn't big enough to recover the fixed costs. How many pills at 4 cents would they have to sell?
    - harryh 9y ago
      Yes, it definitely could be this which is why I said "my gut suspects the arduous FDA approval process." This could be the source of a lot of that fixed cost. I'd be generally curious to see data on what is involved in starting up a new production line for these kinds of pills. Is there a chemist in the house? :)
      - gizmo 9y ago
        https://dailyreckoning.com/generic-bioequivalence-and-outrageous-profits-in-biotech/ https://dailyreckoning.com/generic-bioequivalence-and-outrag... Look for the explanation by Derek Lowe in the linked article. Key points: > The FDA grants market exclusivity to companies that are willing to take ‘grandfathered’ compounds into compliance with their current regulatory framework.” Once a company does that, it gains an effective monopoly through the "generic bioequivalence" rules. Setting up the production line isn't the issue, because the pharmaceutical company will outsource the actual manufacturing of the drugs anyway.
    - Symmetry 9y ago
      If fixed prices inherent to the production of the drug were the key then I wouldn't expect a manufacturer would be able to provide this same drug in the UK for $2 without going out of business. Now, there are probably reasonable health and safety procedures done in the UK but not in Tanzania that bump the price up that much which I want done to my drugs as a wealthy resident of the first world but which I might not be able to afford if I were a Tanzanian. But $400 is clearly not required to make the drug up to reasonable safety standards.
  - jacquesm 9y ago
    At a guess because then that other manufacturer would undercut the first manufacturers cash cows. In other words: it could easily be a cartel of sorts with some regulatory capture thrown in to ensure the cake stays divided between entrenched parties. Situations like these should count as evidence that something isn't quite as it should be.
    - harryh 9y ago
      Cartel behavior is definitely an excellent hypothesis and I couldn't agree more about "something isn't quite as it should be."
justin66 9y ago
> It's unclear to me why another drug manufacturer doesn't come in and undercut the price. From the sound of things these diseases were until very recently isolated to poorer countries. Even today, with the increased number of cases, there might not be enough money to be made based on a few sick North Americans to justify tooling up to make a new drug. (Some of that is about FDA regulatory approval, but not much since it's not a new drug. They'd be manufacturing something that has already been tested and approved.) Ideally the drug company making this thing would just stop being boneheads about pricing. Having this in the news will probably help.
- jonwachob91 9y ago
  >>From the sound of things these diseases were until very recently isolated to poorer countries. Even today, with the increased number of cases, there might not be enough money to be made based on a few sick North Americans to justify tooling up to make a new drug. The article also says albendazole, the drug in question, can be purchased in the UK for $2. Why can I not start a pharma company that A) imports albendazole (and other rare disease drugs) from the UK and other 1st world country at a reasonable markup or B) orders albendazole, and other rare disease drugs, from the same manufacturer that makes it for the UK, and other 1st world countries, at a reasonable markup? I'm genuinely curious about the regulatory landscape of that question.
  - test1235 9y ago
    GlaxoSmithKline produce Zentel[1] (manufactured in India), and they already operate in US[2]. 1. https://www.unitedpharmacies-uk.md/Zentel-Albendazole-400mg-1-Tablet-p-1811.html https://www.unitedpharmacies-uk.md/Zentel-Albendazole-400mg-... 2. https://en.wikipedia.org/wiki/GlaxoSmithKline#Facilities https://en.wikipedia.org/wiki/GlaxoSmithKline#Facilities
  - rhino369 9y ago
    I think our system is so fundamentally broken, you should be able to do that. But if you could, it would be an end run around the FDA. Might as well shut the FDA down in that case. If you add burdensome regulatory costs to some competitors (domestic pills) but not others (foreign pills), the others will win all business. That is an unfair playing field. So part of the deal with regulating drugs in America is that you can't import drugs from other countries. I think I'd probably allow importation of the exact drug, by the exact manufacturer. Or just set a price control saying you cannot sell a drug for more than 120% of the average price in the EU + Japan + Canada + Australia + NZ etc.
barry-cotter 9y ago
You are correct. The FDA is insanely parochial. They won’t allow importation of generics approved by their European, Canadian or Japanese equivalents of generics with decades of use. The only reason Martin Shrkeli was able to jack up the price of the drug he did, a generic, is because the FDA won’t white label or fast track drugs from other jurisdictions.

by harryh 9y ago

gizmo 9y ago

Because there is no price the competitor can charge that the original supplier can't match. There is no profit to be made, unless there is only a single manufacturer. Also, it's difficult to acquire approval needed from the FDA to demonstrate the new drug is safe and equivalent to the already approved because the original producer won't cooperate and provide relevant samples to their competition so they can demonstrate equivalence.

harryh 9y ago
Because there is no price the competitor can charge that the original supplier can't match. This is a commonly cited reason but I don't buy it. They're selling these things for 4 cents in tanzania so we're talking about something that is practically free to make. There are lots of things that cheap where we see competition in the US: paperclips, reams of paper, chewing gum, whatever. Why is there competition for these things but not cheap drugs?
- edko 9y ago
  Maybe the market in the US isn't big enough to recover the fixed costs. How many pills at 4 cents would they have to sell?
  - harryh 9y ago
    Yes, it definitely could be this which is why I said "my gut suspects the arduous FDA approval process." This could be the source of a lot of that fixed cost. I'd be generally curious to see data on what is involved in starting up a new production line for these kinds of pills. Is there a chemist in the house? :)
    - gizmo 9y ago
      https://dailyreckoning.com/generic-bioequivalence-and-outrageous-profits-in-biotech/ https://dailyreckoning.com/generic-bioequivalence-and-outrag... Look for the explanation by Derek Lowe in the linked article. Key points: > The FDA grants market exclusivity to companies that are willing to take ‘grandfathered’ compounds into compliance with their current regulatory framework.” Once a company does that, it gains an effective monopoly through the "generic bioequivalence" rules. Setting up the production line isn't the issue, because the pharmaceutical company will outsource the actual manufacturing of the drugs anyway.
  - Symmetry 9y ago
    If fixed prices inherent to the production of the drug were the key then I wouldn't expect a manufacturer would be able to provide this same drug in the UK for $2 without going out of business. Now, there are probably reasonable health and safety procedures done in the UK but not in Tanzania that bump the price up that much which I want done to my drugs as a wealthy resident of the first world but which I might not be able to afford if I were a Tanzanian. But $400 is clearly not required to make the drug up to reasonable safety standards.
- jacquesm 9y ago
  At a guess because then that other manufacturer would undercut the first manufacturers cash cows. In other words: it could easily be a cartel of sorts with some regulatory capture thrown in to ensure the cake stays divided between entrenched parties. Situations like these should count as evidence that something isn't quite as it should be.
  - harryh 9y ago
    Cartel behavior is definitely an excellent hypothesis and I couldn't agree more about "something isn't quite as it should be."

justin66 9y ago

> It's unclear to me why another drug manufacturer doesn't come in and undercut the price. From the sound of things these diseases were until very recently isolated to poorer countries. Even today, with the increased number of cases, there might not be enough money to be made based on a few sick North Americans to justify tooling up to make a new drug. (Some of that is about FDA regulatory approval, but not much since it's not a new drug. They'd be manufacturing something that has already been tested and approved.) Ideally the drug company making this thing would just stop being boneheads about pricing. Having this in the news will probably help.

jonwachob91 9y ago
>>From the sound of things these diseases were until very recently isolated to poorer countries. Even today, with the increased number of cases, there might not be enough money to be made based on a few sick North Americans to justify tooling up to make a new drug. The article also says albendazole, the drug in question, can be purchased in the UK for $2. Why can I not start a pharma company that A) imports albendazole (and other rare disease drugs) from the UK and other 1st world country at a reasonable markup or B) orders albendazole, and other rare disease drugs, from the same manufacturer that makes it for the UK, and other 1st world countries, at a reasonable markup? I'm genuinely curious about the regulatory landscape of that question.
- test1235 9y ago
  GlaxoSmithKline produce Zentel[1] (manufactured in India), and they already operate in US[2]. 1. https://www.unitedpharmacies-uk.md/Zentel-Albendazole-400mg-1-Tablet-p-1811.html https://www.unitedpharmacies-uk.md/Zentel-Albendazole-400mg-... 2. https://en.wikipedia.org/wiki/GlaxoSmithKline#Facilities https://en.wikipedia.org/wiki/GlaxoSmithKline#Facilities
- rhino369 9y ago
  I think our system is so fundamentally broken, you should be able to do that. But if you could, it would be an end run around the FDA. Might as well shut the FDA down in that case. If you add burdensome regulatory costs to some competitors (domestic pills) but not others (foreign pills), the others will win all business. That is an unfair playing field. So part of the deal with regulating drugs in America is that you can't import drugs from other countries. I think I'd probably allow importation of the exact drug, by the exact manufacturer. Or just set a price control saying you cannot sell a drug for more than 120% of the average price in the EU + Japan + Canada + Australia + NZ etc.

barry-cotter 9y ago

You are correct. The FDA is insanely parochial. They won’t allow importation of generics approved by their European, Canadian or Japanese equivalents of generics with decades of use. The only reason Martin Shrkeli was able to jack up the price of the drug he did, a generic, is because the FDA won’t white label or fast track drugs from other jurisdictions.