SoylentNews is people
SoylentNews
from the that's-another-fine-mess-you've-gotten-into dept.
Reuters reports on a record 84 million pound fine (about $107 million) for its role in raising the cost of a generic epilepsy drug by up to 2600%:
The Competition and Markets Authority (CMA) also fined Flynn Pharma 5.2 million pounds for overcharging for phenytoin sodium capsules, following a dramatic price hike in 2012. The CMA's ruling comes amid a growing debate on both sides of the Atlantic about the ethics of price hikes for old off-patent medicines that are only made by a few firms and where there is little competition. U.S. drugmaker Turing Pharmaceuticals, led at the time by hedge fund manager Martin Shkreli, caused outrage last year by raising the U.S. price of Daraprim, an old anti-infective drug, by more than 5,000 percent to $750 a pill.
[...] Pfizer used to market the medicine under the brand name Epanutin but sold the rights to Flynn, a privately owned British company, in September 2012. It was then debranded, meaning that it was no longer subject to price regulation, and the price soared. "The companies deliberately exploited the opportunity offered by debranding to hike up the price for a drug which is relied upon by many thousands of patients," Philip Marsden, chairman of the CMA's case decision group, said on Wednesday. "This is the highest fine the CMA has imposed and it sends out a clear message to the sector that we are determined to crack down on such behavior."
So, ironically, by turning the drug into a "generic" under UK regulations, they were able to jack the price up to extreme levels. Pfizer plans to appeal the ruling. The Guardian has further details:
Pfizer defended its actions, saying the drugs were loss-making before they were debranded and distributed through Flynn Pharma. It also argued that the price was less than that of the equivalent medicine from another supplier to the NHS.
A spokesman for the CMA said Pfizer recouped its losses on the medication within two months, adding that the price of other drugs did not permit the companies fined to charge "excessive and unfair prices".
One thing I wonder about such fines is whether they can possibly be effective. Even if they manage to hurt a pharmaceutical company's bottom line in the UK a bit, without some sort of international standard regulation of drug pricing, won't they just pass any costs of litigation onto consumers in the U.S. or somewhere else by hiking the price on this or other drugs even more?
(Score: 2) by Immerman on Friday December 09 2016, @08:07PM
What part of supply and demand do you not understand? If I have the only supply, and you have an unavoidable demand, then "How much you got?" is *exactly* how the free market will price it.
(Score: 2) by Nerdfest on Friday December 09 2016, @08:31PM
Perhaps government-run power, water, health, etc, should set up some special pricing for employees of these companies. Just supply and demand.
(Score: 2) by bzipitidoo on Saturday December 10 2016, @06:54PM
Not that simple, because events do not happen in isolation. Sure, the shop can gouge a desperate customer. But, very soon word gets around, and nobody will trust that shop again. I know a small town gas station that was doing okay until 9/11/2001, when they hiked their gas price to $5/gallon in response to the attacks of that day. For that, the locals boycotted them. It wasn't even an organized boycott, it was simply everyone individually shunning the place out of outrage, distrust, and fear of what other gouges they might try. The gas station soon folded.
These greedy pharmaceutical companies were utter fools for putting themselves in the spotlight in this fashion. You don't gouge people so horrendously that Congress hauls your ass in and demands that you justify it, which of course you can't do. Then what does that idiot Shkreli do but dig himself in deeper with his callous, smug, and contemptuous attitude. It didn't merely tar those companies that did it, it lit up the entire pharmaceutical industry with seriously negative publicity. In a way, we ought to thank Shkreli. He could hardly have done more if his goal was to end price gouging on vital drugs.
The market better put valuations of more than $0 on the social contract, or Homo Economicus will keep making that mistake.
(Score: 2) by Immerman on Sunday December 11 2016, @11:24PM
I agree that social outrage can work great provided one of two things are true:
There's another source of the good in question. (in which case we generally wouldn't be having this conversation in the first place)
or
People can do without the good if they have to.
Both are true for price gouging on gasoline. Neither is for life-saving drugs. (Okay, technically you could do without if you were outraged enough, but most people put a rather high value on their own continued existence)
In that case you're basically limited to two options to avoid predatory pricing: Government imposed price controls, or revocation of government-granted monopoly status. And the latter only works when there's not a natural monopoly in play to begin with.