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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: 4, Insightful) by meustrus on Friday December 09 2016, @10:36PM
This right here is the issue. Right now, the people that care about the plight of poor people see this kind of situation and think, "how can government regulation fix it?" But the fact is that lack of government fines and price regulation didn't cause this problem. Market consolidation did. If you want to really solve the problem, you have to go after the market forces that gave one drug company a monopoly over a generic product.
Generics are the best possible product. They cost no R&D to produce because somebody already paid that cost. They have much less regulatory red tape to deal with than other products in the same industry because, again, somebody else already dealt with all of it. They have a captive market, often full of people who have been paying more for the drug than the actual cost of its production. And they are very, very cheap to produce.
So why aren't there more drug companies making generics these days? Perhaps it has something to do with all of the corporate mergers in the industry. Perhaps the corporations themselves are engaged in secret competition-busting negotiations where, for example, company A agrees not to produce a generic competitor to company B's product if company B agrees to do likewise. But one thing is clear: the industry used to work just fine at lower prices. If Pfizer has a problem making a profit at a competitive price on a dream product, then they deserve to be out-competed on the free market.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?