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Leading drug companies including Teva, Pfizer, Novartis and Mylan conspired to inflate the prices of generic drugs by as much as 1,000 percent, according to a far-reaching lawsuit filed on Friday by 44 states.
The industrywide scheme affected the prices of more than 100 generic drugs, according to the complaint, including lamivudine-zidovudine, which treats H.I.V.; budesonide, an asthma medication; fenofibrate, which treats high cholesterol; amphetamine-dextroamphetamine for A.D.H.D.; oral antibiotics; blood thinners; cancer drugs; contraceptives; and antidepressants.
"We all know that prescription drugs can be expensive," Gurbir S. Grewal, the New Jersey attorney general, said in a statement. "Now we know that high drug prices have been driven in part by an illegal conspiracy among generic drug companies to inflate their prices."
In court documents, the state prosecutors lay out a brazen price-fixing scheme involving more than a dozen generic drug companies and just as many executives responsible for sales, marketing and pricing. The complaint alleges that the conspirators knew their efforts to thwart competition were illegal and that they therefore avoided written records by coordinating instead at industry meals, parties, golf outings and other networking events.
(Score: 5, Informative) by bradley13 on Monday May 13 2019, @09:29AM (32 children)
Price-fixing is illegal, because it gives the producers the effect of a monopoly, with the appearance of competition.
I'm not in the US any more, but something, somewhere has gone terribly wrong when generic medications cost a fortune. Consider the insulim caravan heading to Canada - there is no possible justification for insulin costing 10x as much in the US as in Canada. In a capitalist (i.e., competitive) market, the price would settle at a level that allows a marginal profit. If that's not happening, it means (a) the competitors have agreed not to compete (price fixing), and (b) the market is blocked to new entrants (corporate cronyism).
Both of these problems are almost certain due to the responsible government agencies being effectively owned by the pharma industry. They fail to regulate in a way that would prevent price-fixing (for example, by throwing CxOs in jail), but they do regulate to prevent imports of the same drugs from other countries and to erect barriers to the entry into the market of new competitors. In a word: corruption.
Everyone is somebody else's weirdo.
(Score: 2) by c0lo on Monday May 13 2019, @09:56AM
(You didn't have to explain it to me, the AC seemed to be lost for this bit)
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 4, Interesting) by FatPhil on Monday May 13 2019, @10:06AM (30 children)
That this settling is *downwards* is a fallacious belief that is extremely frequently held. Let's try forcing a single direction into that settling, as some people seem to believe:
Hypothesis: A perfect competitive market will maximise the amount of resource or service P you can get per unit Q.
This exchange is currency for pills.
Conclusion1: A perfect competitive market will maximise the amount of pills you can get per unit currency.
Agree?
You shouldn't do, because P was currency, and Q was pills.
Conclusion2: A perfect competitive market will maximise the amount of money you can get per pill.
Which seems to be how the market has behaved. The big-pharma customers for our money are being really stingy with the quantity of pills they want to spend for it.
Ooops, P was only currency because I said "currency for pills" and I took the order too literally, obviously the trade is pills for currency, and Conclusion1's truth is restored. A contradiction not only to facts, but mostly to the conclusion from a symmetric change of variables. Therefore the oft held hypothesis must be false.
In reality (which practically doesn't exist, there are almost no perfect markets) it settles to a compromise, which is up from one person's viewpoint, and down from the other's.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 5, Insightful) by isostatic on Monday May 13 2019, @11:25AM (10 children)
If the price goes below the cost of making it, manufacturers won't make it.
If the price goes above the value of the good, consumers won't buy it.
The number consumers are willing to buy for a given price caries due to the elasticity of demand.
This works for eggs, or flights, or rope, where the cost of not buying them is managable.
It doesn't work when the cost is "everything". Drugs to keep you alive have zero elasticity. Doesn't matter what the price is, you need to buy it.
However the industry can't increase demand for the drug by reducing prices, you either need it or you don't.
Therefore the only way the price will not be everything is
1) Competition with other manufacturers
2) Government regulation
In the U.S. (2) is a dirty word, so we're left with (1). A given manufacturer may make a short term profit by undercutting the other manufacturers, however that will soon vanish as everyone else reduces their prices, and everyone ends up with less profit.
On the flip side though, a given manufacturer can increase their prices, and take a short term hit, until everyone else sees they can also increase their prices. Everyone makes a profit by moving the costs up.
The normal ceiling on the price (people won't buy it if it's too expensive) doesn't work, because people have to buy it to live. If a company can sell 900 at $1k rather than 1000 at $100, they will. The 100 people who can't afford $1k? Well they'll just die.
Meanwhile the 900 that spend $1k are suddenly cutting back on eggs, flights, and rope, because they can no longer afford these things, and the farmers, pilots and rope makers all suffer
(Score: 2) by PiMuNu on Monday May 13 2019, @12:30PM (2 children)
I like your argument. The counter is:
Say there are two manufacturers who sell some product.
1. In the universe where only two manufacturers exist, your argument is correct.
2. In the universe where a third manufacturer will come into existence if it is possible to make the product more cheaply and still make a profit, then the price will tend to the minimum required to make a profit.
"Price fixing" means using unfair or coercive practices to stop the third manufacturer coming into existence (e.g. block distribution).
(Score: 3, Insightful) by isostatic on Monday May 13 2019, @12:48PM
It costs real capital to become that third manufacturer, and the established companies can push them out of business using various means (selling at a loss, poaching the knowlegable staff, sending the mafia round, etc)
Even if that third manufacturer has the capital and knowlege to come in to the market, they will simply settle for charging the full amount and taking 33% of the high price market rather than 100% of the low price market (or more likely 33% of the low price market)
(Score: 0) by Anonymous Coward on Monday May 13 2019, @02:51PM
In this particular case, "price fixing" means *coordination* between the existing vendors of generic drugs to avoid competition. It's not just the first two, it's *all* of them. And the result isn't just that more vendors rush in to take advantage of the arbitrage, the result is that people who may die slowly and painfully need to pony up or else.
There's nothing wrong with such activities. All that matters is the money.
Let's do the same for food, housing, clothes, education and everything else.
This bill should do the trick:
Proposed regulatory bill (S19111):
All vendors, regardless of product, service or other good will regularly communicate with other vendors in their industry to ensure that profit is maximized over all other concerns. All vendors *must* seek to maximize both production and prices. Not ensuring that such actions are taken will be punishable by the seizure of all assets and the revocation of work eligibility of all involved (including their families). All residents will be required to beat, rape, berate, spit upon and otherwise degrade/denigrate such folks until such time as they are publicly put to death.
Any entity that is found to prioritize anything other than profit (regardless of whether that entity is publicly traded or privately owned) will have its assets seized and all individuals (as well as their families) involved publicly put to death.
Non-profit organizations, public-benefit corporations and other organizations not predicated on profit will immediately have any charters revoked. Any individuals attempting to operate such organizations shall have their assets seized and be publicly put to death.
(Score: 2) by FatPhil on Monday May 13 2019, @12:50PM (4 children)
You're gonna have to define "the value" in order for me to know the truthiness of that assertion.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by FatPhil on Monday May 13 2019, @01:05PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by isostatic on Monday May 13 2019, @01:22PM (2 children)
The value to a given consumer is the amount that a given consumer is willing to pay for it.
(Score: 0) by Anonymous Coward on Monday May 13 2019, @07:11PM (1 child)
That falls apart for non-luxury goods like food, medicine, shelter. Hell even some luxury goods are basically required these days. Internet? Required for so many people. Smart phones? Almost a requirement these days. Vehicles are required for the vast majority of families, etc.
Your simplistic statement holds intrinsic value, but as usual such ideas fall to pieces in the face of a more complicated reality.
(Score: 1) by khallow on Wednesday May 15 2019, @02:25AM
Why does it fall apart? Are we no longer willing to pay for food, medicine, and shelter because we need those things to some degree? The statement remains accurate.
(Score: 2) by HiThere on Monday May 13 2019, @04:54PM
It's worse than that. You're dealing with a prescription medicine, so you can only (at any one time) buy a version that your doctor has prescribed. That can vary a bit, but if the corporation selling it raises their prices, and the others don't, you've got to continue to buy it from the same source until you've got the paperwork straightened out to buy it from someone else, and if it turns out that the new source is unsuitable for some reason (allergies, wild variations in dosage, etc.) you are stuck with them anyway until you can get the paperwork changed again. So there's a strong inclination to not change when you have something that's working. The name is not the thing.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 1) by khallow on Wednesday May 15 2019, @02:13AM
So how many of your friends and family are you willing to sacrifice to live ten minutes longer? The elasticity is still there. There are prices you would be unwilling to pay just to live a little longer. There are also plenty of examples of people deliberately making choices that shorten their lifespan for money or other things. So it's quite clear that keeping oneself alive is not an infinite value thing.
What about that doesn't work?
(Score: 3, Interesting) by Immerman on Monday May 13 2019, @01:57PM (5 children)
Not remotely.
If you have one pill company, then they will obviously be able to exchange their life-saving pills for the maximum amount of currency possible.
If you have two pill companies though, the second company can price their pills slightly cheaper, still make a huge amount of profit, and everyone will buy pills from them instead of you. Unless you price your pills slightly cheaper to win back customers, but then they'll lower their prices again, and back and forth until you're both selling pills so cheaply you can't cut prices any more without losing money. That's how things work in a competitive market - any profit margins evaporate in price wars, because with 10,000 different pill makers all making identical pills, one of them will always be willing to cut prices to the point that revenue just covers expenses, wages, etc., and there's just barely enough profit to attract investors from other, even less profitable businesses, and everybody else has to do the same or go out of business because nobody will buy their obviously overpriced pills.
If that's *not* happening, then it means the pill makers are all colluding to keep prices artificially high, which means you no longer actually have a competitive market and the efficiencies it creates.
(Score: 2) by FatPhil on Monday May 13 2019, @11:39PM (3 children)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by Immerman on Tuesday May 14 2019, @01:42PM (2 children)
It doesn't work the other way - money is the ultimate fungible asset, it has no inherent value of its own, instead its value is set by all the many things it can be exchanged for.
The function of a competitive market is not to maximize anything in the exchange, instead it's to minimize inefficiencies. Take the money out of it and things become less convenient, but you still trade a loaf of bread for the number of pills that take the same value in labor and resources to produce and exchange. No inefficiencies caused by price gouging, and everyone has incentive to reduce inefficiencies in production to minimize the labor and resources needed to produce their widgets - which actually serves to reduce the cost of a widget, but increase the social wealth produced from of the resources and labor.
(Score: 2) by FatPhil on Wednesday May 15 2019, @06:38AM (1 child)
You seem to accept that a bread/pill trade is just about meaningful (let's ignore what the taxman thinks, but I reckon I can get 8 bottles of polish mead for 12 bottles of estonian craft beer, so this certainly makes sense to me), and I'm sure you accept that you can buy currency 1 with currency 2, so why are you pretending that somehow currency is unique as an asset and has a special place in a currency-asset trade.
Aside - do you view cryptocurrencies in exactly the same way as you do other currencies?
What about Venezuelans Bolivars? ( https://www.bloomberg.com/features/2016-venezuela-cafe-con-leche-index/ )
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by Immerman on Wednesday May 15 2019, @01:40PM
The entire point of currency is to facilitate trade - so that if I make bread and want beer, I don't need to find someone who makes beer and wants bread, or go through some contrived adventure-game series of trades to get it. And yeah - the tax man takes his cut when you use money - but you're generally supposed to give him a cut when you trade goods or services directly as well (paid on the currency-equivalent value of the trade), though almost no-one does. And yes, I consider crypto-currency the same as any other - be it printed paper, carved shells, stone wheels, or transactions on a bank ledger - it's all a social construct to facilitate trade with zero inherent value. And that's easily observed - if I offered to buy something expensive from you in wampum, stone wheels (I forget the name), etc. at their traditional value you'd be crazy to accept, because those currencies no longer have any social support behind them. (if it were something cheap maybe the novelty would be worth something to you, but a dump-truck full of it?)
My real point was the second paragraph though - The argument for social support of capitalism and free markets has nothing to do with maximizing anything for the participants - it's for minimizing inefficiency. The only thing maximized is the amount of goods and services produced from a given amount of labor resources, which probably correlates pretty well with maximizing the total amount of real wealth generated by society, but *minimizes* the profits of all the participants, because profits (as distinct from fair pay for your labor) can only exist by harnessing inefficiencies that interfere with free trade - a.k.a. someone is getting cheated by an unfair trade.
(Score: 0) by Anonymous Coward on Tuesday May 14 2019, @12:21AM
And that's why the dollar stores still sell aspirin, BNP creams, tolnaftate, clotrimazole, and quite a few more handy chemicals for a buck...
(Score: 0, Redundant) by khallow on Monday May 13 2019, @01:58PM (12 children)
Counterexample, the oil market in Iran which at times has been subsidized enough that oil could be obtained for less than it cost to provide. A perfectly competitive market wouldn't do that for extended periods of time, but subsidies can. A similar thing goes on with mass transit throughout the world with access routinely provided below cost.
But we already know "the market" is far from being a perfectly competitive market. It's not just the cartel behavior. It's also the regulatory dynamics which enforce barrier to entry, a necessary elements to cartel formation.
In reality, viewpoints are viewpoints. Competitivity is an objective quality of a market rather than a subjective quality of a viewpoint.
(Score: 2) by FatPhil on Monday May 13 2019, @11:34PM (11 children)
>
>> Hypothesis: A perfect competitive market will maximise the amount of resource or service P you can get per unit Q.
>
> Counterexample ...
Fucksticks, you've hit max retard.
Have you ever heard of /reductio ad absurdum/? A statement that is known to be false and desired to be disproved is proposed, and deductions are made from it until a contradiction is reached, thus disproving it.
The rest of your post contains even more idiocy, but the above is the biggest case of fucknutitude.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0, Troll) by khallow on Tuesday May 14 2019, @03:18AM (5 children)
The amateur logic exercise doesn't add anything to the discussion, such as bringing up near trivial straw man hypotheses that can easily be falsified with a little thought (reductio ad absurdum? yea right). Come on, up your game.
(Score: 2) by FatPhil on Tuesday May 14 2019, @07:47AM (4 children)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1) by khallow on Tuesday May 14 2019, @12:30PM (3 children)
Another useless reply. You want to have a rational discussion? I'm up for that. You want to say "bullshit" when you run out of things to say? Your choice.
(Score: 2) by FatPhil on Wednesday May 15 2019, @05:42AM (2 children)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1) by khallow on Wednesday May 15 2019, @10:42AM (1 child)
Sorry, that wasn't simple logical deduction nor appropriate to the thread.
Nor has anyone, including you, bothered to work out this alleged error either.
Funny, how my problems involve you stepping up your game. It's almost like it's not me that is the problem here.
What I find particularly bizarre about the whole episode is the high level of condescension you bring to a "simple logical deduction". First, you repeatedly expound on the logic side as if that were important ("mathematical fact", "Have you ever heard of /reductio ad absurdum/?"). It's like the drunk looking for car keys at night. It's too much work to look in the dark where they dropped the keys, and the lighting is better over here so...
The big problem as I noted before is that the argument, logical as it may be, is irrelevant to the discussion. That's what a straw man argument is, after all. Your condescension doesn't change that your argument isn't adding anything to this discussion.
(Score: 2) by FatPhil on Wednesday May 15 2019, @09:52PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1) by khallow on Wednesday May 15 2019, @02:05AM (4 children)
Note several important things about the context of that statement: a) you're not addressing the replier's concerns at all ("settle at a level that allows a marginal profit" is nothing like "maximise the amount of resource or service P you can get per unit Q" of the replier), b) if such a statement truly is already known to be false (probably even by the person you replied to - their emphasis on "allows a marginal profit" indicates that they're already allow for higher pricing of the good in question beyond what can be achieved via non-market methods), then it doesn't need to be disproved, and c) you don't even start to consider the lack of competition in the supply side versus the relatively high competition on the demand side. Increase in competition of a market where the supply side has weak competition and a large pricing advantage is likely to lower prices (unless you have some crazy non-market mechanisms at play).
(Score: 2) by FatPhil on Wednesday May 15 2019, @06:00AM (3 children)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1) by khallow on Wednesday May 15 2019, @10:43AM (2 children)
And I was highlighting the irrelevance of your highlighting (plus the silliness of building some baroque logic argument when one can easily find real world counterexamples that illustrate the weakness of the straw man better). Sure, I too could choose to interpret your words in the worst possible light I can find or make up, then beat up the resulting straw man, Internet Tough Guy-style, but it wouldn't contribute anything more to the discussion than your original post did.
And I showed there are already real world subsidy systems that can price things well below the above minimization of the price. The initial assumptions rule out significant price minimization strategies, as already discussed.
Let us also note that you still have not considered the context which neuters your argument. There is limited competition for drug manufacturers, but far less limited competition for the consumers of those drugs (while there are big consumers like Medicare and insurance companies, there's also millions of small consumers too). Flipping point of view still doesn't change that there's a disparity in competitiveness of the two sides. Thus that the discussion of increasing competitiveness of the supply side is invariant of such viewpoint swaps.
(Score: 2) by FatPhil on Wednesday May 15 2019, @09:54PM (1 child)
That context was introduced into the thread by the post I was replying to.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1) by khallow on Wednesday May 15 2019, @11:40PM
Indeed. So why ignore it?