4 ms·

Congressional investigation shows Celgene, Teva plotted to keep drug prices high

84 points by AndrewBissell 6y ago

refurb 6y ago
Not to be an apologist for crappy pharma behavior, but some of the accusations don't seem that egregious. "An internal slide presented to the company’s drug pricing advisory board showed that the increase would yield $24 million in new net sales." What kind of company doesn't run revenue estimates for price increases? If you suggest a price increase, the first thing a CEO will ask is "how much extra revenue is that?" "Teva only spent $689 million on Copaxone-related research since 1987 — just 2% of the roughly $34 billion it took in net revenue for the drug over the last two decades" Usually drug sales today, pay for other R&D programs. What was Teva's total R&D spending across their entire portfolio over that time? My rough estimate is >$10B or >1/3 of what they made on Revlimid.[1] "Teva launched a new, more potent version of copaxone as part of what they dubbed a coordinated “generic defense strategy.” The strategy, according to internal powerpoints, included contracting with middlemen to block generics’ market access and aggressive campaigns to lobby both doctors and patients to stay on the more expensive version of the drug." Teva created a new version of Copaxone that could be injected 3 times a week versus 7 times. Sure, incremental improvement, but it's really up to physicians to decide if it's right for their patients. Apparently they do. And "contracting with middlemen to block generics" is just shorthand for "we'll give you a discount so our product is more attractive than the generic". Isn't price competition good? I'm not defending Teva's behavior here (yes, they have done shitty things), or the price of their drugs (yes, MS drugs are way too expensive). I'm just saying if you want to impose price controls on drugs, then just do it. Be upfront. Pass a bill that says "your drugs must be priced under $xx,xxx dollars". This looks like a campaign to shit on a company for pretty typical company things, like forecasting out revenue from a price increase and selectively pulling statistics to paint a situation in the worst possible light that has no bearing on how things actually work. [1]https://www.statista.com/statistics/272544/expenditure-on-research-and-development-by-teva-since-2006/ https://www.statista.com/statistics/272544/expenditure-on-re...
- uniqueid 6y ago
  Isn't price competition good? Having a lower price than a competitor is not always the same thing as price competition. Ie: https://en.m.wikipedia.org/wiki/Predatory_pricing https://en.m.wikipedia.org/wiki/Predatory_pricing
  - refurb 6y ago
    Sure, but in the generic drug market, you rarely see generic makers pull out of a market. What Teva basically did was drop the price enough to make the generic not that attractive in a cost basis.
taurath 6y ago
I’ll believe something changes in the pharmaceutical industry when I see it. It’s been a problem my entire life, and they’ve bought too many senators and house reps. This country doesn’t even pretend to have the right priorities.
patfla 6y ago
Of the parts of the world, other than the US, that I'm most familiar with, Japan and Western Europe, they control drug prices - and keep them low. I've had a theory for a while that the way world drug companies make up for low profitability in those markets is in gouging in the US where it's a free-for-all and one should grab for as much as one can get. The totality of US healthcare is a big, complicated $3+ trn/yr pie but there's flagrant abuse all over the system (and a variety of intl players, profitably for them, contribute) and pharmaceutical companies are eager to be in on the game. I wonder what would happen to healthcare globally if the US were able to downsize its 20%-of-gdp system to something on the order of Western Europe or Japan which is to say 10% of gdp? That is, the revenue the system generates would drop by half. Needless to say, there'd be resistance tantamount to, let's call it, institutional violence. US doctors' earnings cut in half? You've got to be kidding.
- rogerthis 6y ago
  In Brazil they control the prices and keep them... high.
- flurben 6y ago
  What leads you to believe that cutting drug prices would cause doctors' earnings to fall?
  - debacle 6y ago
    There is gross waste at every layer. The AMA artificially keeps doctors' earnings higher than they would be in a system that could respond to demand.
    - ineedasername 6y ago
      How are they keeping earnings high?
      - ikerdanzel 6y ago
        Restricting supplies of doctors.
hentrep 6y ago
Lots of conversation on the cost of US healthcare seems hyper-focused on prescription drug prices. A report released last week seems to contradict the notion that prescription drug prices are the culprit. Yes, prescription drugs cost more in the US than the rest of the world, but the real burden on healthcare seems related to administrative costs. [0] Per an analysis of the report [1]: “The U.S. spent $10,637 per capita on health care in 2018. Comparable countries spent $5,527. The overwhelming majority of the difference — 76% of it — came from spending on inpatient and outpatient care — not drugs, which get more attention but represent just 10% of the difference.“ As someone who works in the pharmaceutical industry, I’ll be the first to admit that the financial toxicity associated with prescription drugs is a very real concern. To be absolutely clear, there is opportunity to reduce the cost for many prescription drugs without hobbling innovation. But perhaps the conversation would be better served by focusing on the larger system that allow healthcare costs to flourish unchecked? Should we not also be outraged when a single hospital-provided band-aid costs $7.00 (~20X markup)? [2] Price gouging is rampant across the board. [0] https://www.healthsystemtracker.org/brief/what-drives-health-spending-in-the-u-s-compared-to-other-countries/ https://www.healthsystemtracker.org/brief/what-drives-health... [1] https://www.axios.com/drugs-arent-the-reason-the-us-spends-so-much-on-health-care-d68da7b8-71c9-46a7-bd71-0b94ba850129.html https://www.axios.com/drugs-arent-the-reason-the-us-spends-s... [2] https://www.pri.org/stories/2017-10-16/curious-case-629-er-bill-and-one-expensive-band-aid https://www.pri.org/stories/2017-10-16/curious-case-629-er-b...

84 points by AndrewBissell 6y ago

Not to be an apologist for crappy pharma behavior, but some of the accusations don't seem that egregious. "An internal slide presented to the company’s drug pricing advisory board showed that the increase would yield $24 million in new net sales." What kind of company doesn't run revenue estimates for price increases? If you suggest a price increase, the first thing a CEO will ask is "how much extra revenue is that?" "Teva only spent $689 million on Copaxone-related research since 1987 — just 2% of the roughly $34 billion it took in net revenue for the drug over the last two decades" Usually drug sales today, pay for other R&D programs. What was Teva's total R&D spending across their entire portfolio over that time? My rough estimate is >$10B or >1/3 of what they made on Revlimid.[1] "Teva launched a new, more potent version of copaxone as part of what they dubbed a coordinated “generic defense strategy.” The strategy, according to internal powerpoints, included contracting with middlemen to block generics’ market access and aggressive campaigns to lobby both doctors and patients to stay on the more expensive version of the drug." Teva created a new version of Copaxone that could be injected 3 times a week versus 7 times. Sure, incremental improvement, but it's really up to physicians to decide if it's right for their patients. Apparently they do. And "contracting with middlemen to block generics" is just shorthand for "we'll give you a discount so our product is more attractive than the generic". Isn't price competition good? I'm not defending Teva's behavior here (yes, they have done shitty things), or the price of their drugs (yes, MS drugs are way too expensive). I'm just saying if you want to impose price controls on drugs, then just do it. Be upfront. Pass a bill that says "your drugs must be priced under $xx,xxx dollars". This looks like a campaign to shit on a company for pretty typical company things, like forecasting out revenue from a price increase and selectively pulling statistics to paint a situation in the worst possible light that has no bearing on how things actually work. [1]https://www.statista.com/statistics/272544/expenditure-on-research-and-development-by-teva-since-2006/ https://www.statista.com/statistics/272544/expenditure-on-re...

uniqueid 6y ago
Isn't price competition good? Having a lower price than a competitor is not always the same thing as price competition. Ie: https://en.m.wikipedia.org/wiki/Predatory_pricing https://en.m.wikipedia.org/wiki/Predatory_pricing
- refurb 6y ago
  Sure, but in the generic drug market, you rarely see generic makers pull out of a market. What Teva basically did was drop the price enough to make the generic not that attractive in a cost basis.

taurath 6y ago

I’ll believe something changes in the pharmaceutical industry when I see it. It’s been a problem my entire life, and they’ve bought too many senators and house reps. This country doesn’t even pretend to have the right priorities.

patfla 6y ago

Of the parts of the world, other than the US, that I'm most familiar with, Japan and Western Europe, they control drug prices - and keep them low. I've had a theory for a while that the way world drug companies make up for low profitability in those markets is in gouging in the US where it's a free-for-all and one should grab for as much as one can get. The totality of US healthcare is a big, complicated $3+ trn/yr pie but there's flagrant abuse all over the system (and a variety of intl players, profitably for them, contribute) and pharmaceutical companies are eager to be in on the game. I wonder what would happen to healthcare globally if the US were able to downsize its 20%-of-gdp system to something on the order of Western Europe or Japan which is to say 10% of gdp? That is, the revenue the system generates would drop by half. Needless to say, there'd be resistance tantamount to, let's call it, institutional violence. US doctors' earnings cut in half? You've got to be kidding.

rogerthis 6y ago
In Brazil they control the prices and keep them... high.
flurben 6y ago
What leads you to believe that cutting drug prices would cause doctors' earnings to fall?
- debacle 6y ago
  There is gross waste at every layer. The AMA artificially keeps doctors' earnings higher than they would be in a system that could respond to demand.
  - ineedasername 6y ago
    How are they keeping earnings high?
    - ikerdanzel 6y ago
      Restricting supplies of doctors.

hentrep 6y ago

Lots of conversation on the cost of US healthcare seems hyper-focused on prescription drug prices. A report released last week seems to contradict the notion that prescription drug prices are the culprit. Yes, prescription drugs cost more in the US than the rest of the world, but the real burden on healthcare seems related to administrative costs. [0] Per an analysis of the report [1]: “The U.S. spent $10,637 per capita on health care in 2018. Comparable countries spent $5,527. The overwhelming majority of the difference — 76% of it — came from spending on inpatient and outpatient care — not drugs, which get more attention but represent just 10% of the difference.“ As someone who works in the pharmaceutical industry, I’ll be the first to admit that the financial toxicity associated with prescription drugs is a very real concern. To be absolutely clear, there is opportunity to reduce the cost for many prescription drugs without hobbling innovation. But perhaps the conversation would be better served by focusing on the larger system that allow healthcare costs to flourish unchecked? Should we not also be outraged when a single hospital-provided band-aid costs $7.00 (~20X markup)? [2] Price gouging is rampant across the board. [0] https://www.healthsystemtracker.org/brief/what-drives-health-spending-in-the-u-s-compared-to-other-countries/ https://www.healthsystemtracker.org/brief/what-drives-health... [1] https://www.axios.com/drugs-arent-the-reason-the-us-spends-so-much-on-health-care-d68da7b8-71c9-46a7-bd71-0b94ba850129.html https://www.axios.com/drugs-arent-the-reason-the-us-spends-s... [2] https://www.pri.org/stories/2017-10-16/curious-case-629-er-bill-and-one-expensive-band-aid https://www.pri.org/stories/2017-10-16/curious-case-629-er-b...