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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, 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?