from the business-being-good-to-the-common-man dept.
Discussion from a September SoylentNews article.
From the Chicago Tribune:
Stepping into the furor over eye-popping price spikes for old generic medicines, a maker of compounded drugs will begin selling $1 doses of Daraprim, whose price recently was jacked up to $750 per pill by Turing Pharmaceuticals.
San Diego-based Imprimis Pharmaceuticals Inc., which mixes approved drug ingredients to fill individual patient prescriptions, said Thursday it will supply capsules containing Daraprim's active ingredients, pyrimethamine and leucovorin, for $99 for a 100-capsule bottle, via its website.
The 3 1/2-year-old drug compounding firm also plans to start making inexpensive versions of other generic drugs whose prices have skyrocketed, Chief Executive Mark Baum told The Associated Press.
"We are looking at all of these cases where the sole-source generic companies are jacking the price way up," Baum said in an interview. "There'll be many more of these" compounded drugs coming in the near future.
The high price of prescription medicines in the U.S. — from drugs for cancer and rare diseases that cost hundreds of thousands of dollars a year down to once-cheap generic drugs now costing many times their old price — has become a hot issue in the 2016 presidential race.
News that Turing, Valeant Pharmaceuticals International Inc. and other drugmakers have bought rights to old, cheap medicines that are the only treatment for serious diseases and then hiked prices severalfold has angered patients. It's triggered government investigations, politicians' proposals to fight "price gouging," heavy media scrutiny and a big slump in biotech stock prices.
Well, that certainly didn't take long. At $99/100 pills, I expect the profits are slim indeed - but there is probably a profit. The company certainly can't afford to just give the stuff away.
So - if one company can show a profit at $1/pill, how in hell does anyone justify selling the pill for hundreds of dollars?
Related Stories
Medicine that costs $1 to make raised in price from $13.50 to $750.00
The head of a US pharmaceutical company has defended his company's decision to raise the price of a 62-year-old medication used by Aids patients by over 5,000%. Turing Pharmaceuticals acquired the rights to Daraprim in August.
CEO Martin Shkreli has said that the company will use the money it makes from sales to research new treatments. The drug is used treat toxoplasmosis, a parasitic affliction that affects people with compromised immune systems.
After Turning's acquisition, a dose of Daraprim in the US increased from $13.50 (£8.70) to $750. The pill costs about $1 to produce, but Mr Shkreli, a former hedge fund manager, said that does not include other costs like marketing and distribution.
Cost of Daraprim Medication Raised By Over 50 Times
BBC is reporting on a massive price hike of an essential drug used by AIDS patients:
The head of a US pharmaceutical company has defended his company's decision to raise the price of a 62-year-old medication used by Aids patients by over 5,000%. Turing Pharmaceuticals acquired the rights to Daraprim in August. CEO Martin Shkreli has said that the company will use the money it makes from sales to research new treatments.
The drug is used treat toxoplasmosis, a parasitic affliction that affects people with compromised immune systems. After Turning's acquisition, a dose of Daraprim in the US increased from $13.50 (£8.70) to $750. The pill costs about $1 to produce, but Mr Shkreli, a former hedge fund manager, said that does not include other costs like marketing and distribution. "We needed to turn a profit on this drug," Mr Shkreli told Bloomberg TV. "The companies before us were just giving it away almost." On Twitter, Mr Shkreli mocked several users who questioned the company's decision, calling one reporter "a moron".
Why not switch to a generic pyrimethamine tablet? They don't exist right now, according to the New York Times (story includes examples of other recent price hikes):
With the price now high, other companies could conceivably make generic copies, since patents have long expired. One factor that could discourage that option is that Daraprim's distribution is now tightly controlled, making it harder for generic companies to get the samples they need for the required testing.
The switch from drugstores to controlled distribution was made in June by Impax, not by Turing. Still, controlled distribution was a strategy Mr. Shkreli talked about at his previous company as a way to thwart generics.
The drug is also used to treat malaria and appears on the World Health Organization Model List of Essential Medicines. Toxoplasmosis infections are a feline gift to the world.
Martin Shkreli, the head of Turing Pharamaceutical who rose to fame by jacking up a 60-year-old generic drug's price by 5500%, has been reported to be arrested by the FBI for securities fraud.
At Bloomberg and a shorter version from NPR.
In the case that closely tracks that suit, federal prosecutors accused Shkreli of engaging in a complicated shell game after his defunct hedge fund, MSMB Capital Management, lost millions. He is alleged to have made secret payoffs and set up sham consulting arrangements. A New York lawyer, Evan Greebel, was also arrested early Thursday. He's accused of conspiring with Shkreli in part of the scheme.
Goes to show you, if you are gonna be evil, try to stay below the radar.
Previously: Cost of Daraprim Medication Raised by Over 50 Times
Drug Firm Offers $1 Version of $750 Turing Pharmaceuticals Pill
Martin Shkreli continues to run business from prison, report says
Martin Shkreli reportedly runs his pharmaceutical company from prison on a contraband smartphone. Shkreli continues to run the remains of the drug company that once earned him the title of most hated man in America, according to a story in the Wall Street Journal. He was convicted of securities fraud and conspiracy in 2017. He has served 16 months of a seven-year sentence in federal prison.
Shkreli is reportedly running Phoenixus AG, formerly known as Turing Pharmaceuticals. In 2015, when Shkreli was the CEO, Turing raised the price of the lifesaving drug Daraprim used by AIDS patients from $13.50 a pill to $750 a pill. The price hike sparked a public outcry.
The Journal says that Shkreli anticipates the company will grow more successful while he's in prison. He believes the company, of which he owns 40%, could be worth $3.7 billion by the time he gets out of prison.
On one recent phone call, Shkreli fired Phoenixus CEO Kevin Mulleady, the Journal reported. Shkreli reportedly later changed his mind, agreeing to suspend Mulleady rather than fire him.
Cartoon villain performance art.
Previously: Martin Shkreli Points Fingers at Other Pharmaceutical Companies
Martin Shkreli Convicted of Securities Fraud Charges, Optimistic About Sentencing
Martin Shkreli Lists Unreleased Wu-Tang Clan Album on eBay
Martin Shkreli's $5 Million Bail Revoked for Facebook Post Seeking Hillary Clinton's Hair
Sobbing Martin Shkreli Sentenced to 7 Years in Prison for Defrauding Investors
Related: Drug Firm Offers $1 Version of $750 Turing Pharmaceuticals Pill
Mylan Overcharged U.S. Government on EpiPens
EpiPen Maker is Facing Shareholder Backlash
FDA Has Named Names of Pharma Companies Blocking Cheaper Generics [Updated]
U.S. Hospitals Band Together to Form Civica Rx, a Non-Profit Pharmaceutical Company
Infamous ex-pharmaceutical executive Martin Shkreli is yet again in trouble with the Federal Trade Commission, which announced today that the convicted fraudster has failed to cooperate with the commission's investigation into whether he violated his lifetime ban from the pharmaceutical industry by starting a company last year called "Druglike, Inc."
[...]
At the center of the dispute is whether Shkreli's co-founding of Druglike runs afoul of his lifetime ban from the pharmaceutical industry, which was in response to Shkreli's infamous move to raise the price of the cheap, life-saving anti-parasitic drug, Daraprim, from $17.50 a pill to $750 a pill in 2015.
[...]
The FTC also noted in its court filing that Shkreli has so far failed to pay any of the $64.6 million in disgorgement he was ordered to pay alongside his lifetime ban.
Previously:
Martin Shkreli Launches Blockchain-Based Drug Discovery Platform
Martin Shkreli Accused of Running Business From Prison With a Smuggled Smartphone
Sobbing Martin Shkreli Sentenced to 7 Years in Prison for Defrauding Investors
Martin Shkreli's $5 Million Bail Revoked for Facebook Post Seeking Hillary Clinton's Hair
Martin Shkreli Lists Unreleased Wu-Tang Clan Album on eBay
Martin Shkreli Convicted of Securities Fraud Charges, Optimistic About Sentencing
Martin Shkreli Points Fingers at Other Pharmaceutical Companies
Related:
U.S. Hospitals Band Together to Form Civica Rx, a Non-Profit Pharmaceutical Company
FDA Has Named Names of Pharma Companies Blocking Cheaper Generics [Updated]
EpiPen Maker is Facing Shareholder Backlash
Mylan Overcharged U.S. Government on EpiPens
Drug Firm Offers $1 Version of $750 Turing Pharmaceuticals Pill
In an effort to avoid being held in contempt of court, former pharmaceutical executive and convicted fraudster Martin Shkreli made an eyebrow-raising argument to a federal judge Friday, stating that his company Druglike, which he previously described as a "drug discovery software platform," was not engaged in drug discovery. As such, he argued he is not in violation of his sweeping lifetime ban from the pharmaceutical industry.
Last month, the Federal Trade Commission and seven states urged a federal judge in New York to hold Shkreli in contempt for allegedly failing to cooperate with an investigation into whether he violated the ban. The FTC said Shkreli failed to turn over requested documents related to Druglike and sit for an interview on the matter.
In the filing Friday, Shkreli claims that he responded to the FTC's requests "promptly and in good faith."
Previously:
FTC: Shkreli May Have Violated Lifetime Pharma Ban, Should be Held in Contempt
Martin Shkreli Launches Blockchain-Based Drug Discovery Platform
Shkreli Released From Prison to Halfway House After Serving <5 of 7 Years
Martin Shkreli Accused of Running Business From Prison With a Smuggled Smartphone
Sobbing Martin Shkreli Sentenced to 7 Years in Prison for Defrauding Investors
Martin Shkreli's $5 Million Bail Revoked for Facebook Post Seeking Hillary Clinton's Hair
Martin Shkreli Lists Unreleased Wu-Tang Clan Album on eBay
Martin Shkreli Convicted of Securities Fraud Charges, Optimistic About Sentencing
Martin Shkreli Points Fingers at Other Pharmaceutical Companies
Related:
"Pure and Deadly Greed": Lawmakers Slam Pfizer's 400% Price Hike on COVID Shots
U.S. Hospitals Band Together to Form Civica Rx, a Non-Profit Pharmaceutical Company
FDA Has Named Names of Pharma Companies Blocking Cheaper Generics [Updated]
EpiPen Maker is Facing Shareholder Backlash
Mylan Overcharged U.S. Government on EpiPens
Drug Firm Offers $1 Version of $750 Turing Pharmaceuticals Pill
(Score: 1, Informative) by Anonymous Coward on Monday October 26 2015, @08:17AM
if you want freedom of economic activity, you have to allow for assholes who will guide their life by "I demand whatever you are willing to pay". luckily, there are more than just 1 producer of most things, therefore they can undercut each other until an equilibrium closer to "I demand whatever is needed for me to pay my taxes and employees". Modulo patents and monopolies of course, but that's why everybody outside the US ignores them. until the TIPP or whatever comes into effect and it will demand that those thieving asshole countries are liberated, of course.
(Score: 2, Insightful) by Anonymous Coward on Monday October 26 2015, @04:40PM
The problem with that reasoning is that allowing vendors to charge what people are willing to pay has to be balanced by competition among vendors so that the price does not excessively exceed the cost of production.
The fundamental problem in this situation is that the FDA is handing out monopolies in exchange for bringing old drugs up to the latest standards of validation. It isn't so clear that this is something that is of value. It seems to me that the desire for extra validation is mostly a bureaucratic whim - the FDA wants to believe that it is necessary, because if it isn't, their standards might be questioned.
(Score: 2, Insightful) by CaTfiSh on Monday October 26 2015, @08:18AM
While life saving, it apparently isn't a drug in high demand. However, when the alternative is exorbitantly priced, it would be wise and cheap for pharmacies to stock this alternative where they wouldn't have with the higher cost version. I suspect that's where they expect to see their profit.
The free market economy wins another one for the consumer.
(Score: 5, Informative) by Anonymous Coward on Monday October 26 2015, @08:23AM
So - if one company can show a profit at $1/pill, how in hell does anyone justify selling the pill for hundreds of dollars?
Easy,
dear members of the board, dear share holders,
we're now making 100 x more profit because of the price hike. Good thing is that the patients don't have a choice and have to keep buying, so this doesn't even affect our market share in the slightest. It's all good.
(Score: 2, Interesting) by Anonymous Coward on Monday October 26 2015, @08:30AM
I suspect there is still at least a 400% mark-up at $1 per pill as well.
$0.99/pill just screams "price point"
(Score: 3, Informative) by gman003 on Monday October 26 2015, @04:37PM
Formulations of the drug are available for as low as $0.02 in some countries. However:
1) Those are countries where infections treatable by pyrimethamine are far more prevalent, and so economy-of-scale kicks in. It's easy to make them for $0.02 a pop when you're making them by the billions - not so much when you're making it by the thousands.
2) The roundabout path to the consumer leads to inefficiency costs. There's just more people in the path.
3) In the countries where it is cheapest, it is subsidized by national governments and international organizations. In the countries where it is similarly uncommon to the United States, the price is within an order of magnitude of $1/pill. The UK has it for about $0.50, from a major manufacturer. A 100% markup for having to go through compounding pharmacies really isn't that absurd.
Keep in mind this is the "quick relief" response to the price hike. Getting a new formulation approved is a longer affair, but will bring that price down even further.
(Score: 2) by unzombied on Monday October 26 2015, @08:19PM
This doesn't add up. Using your rough estimates: "$0.02 a pop when you're making them by the billions." RelativelyReasonableCompany makes a profit of 5X (say cost is $0.20/pill) selling them for $0.99 by "the thousands" in OnceRichCountry. That's a single order of manitude in cost difference, a single order of magnitude in selling price, and 6 orders of magnitude in economy-of-scale. RichCompany in OnceRichCountry makes a gouging profit, 3 orders of magnitude, selling at $750/pill, above RelativelyReasonableCompany, while manufacturing costs remain the same $0.20/pill for both.
That's presuming RichCompany doesn't import the pill from PoorCountry making them "by the billions" for a few more magnitudes of profit.
(Score: 3, Disagree) by q.kontinuum on Monday October 26 2015, @08:30AM
It's called "free market". Luckily in this case the patents are already expired, and therefore the free market can also provide the solution to the problem.
Registered IRC nick on chat.soylentnews.org: qkontinuum
(Score: 5, Informative) by Jiro on Monday October 26 2015, @09:18AM
Sort of. The problem is that the FDA is restricting the free market by requiring that generics are shown to be as effective as the non-generic version, but the company that makes the non-generic version won't let you buy any for tests (and the tests are expensive anyway).
The loophole used here is that if you manufacture pills for an individual patient, you're a "compounding pharmacist" and do not have to obey these rules about testing generics.
So it's free market in the sense that more people will buy the $1 version than the $750 version, but it's non-free-market in the sense that the guy who made the $750 version only was able to do that because of government interference (FDA testing rules) in the first place.
(Score: 4, Insightful) by Anonymous Coward on Monday October 26 2015, @09:48AM
Well, the requirement to test your pills is good. So the right fix would be to make sure that those who are required to test are also able to test.
If you want to sell a new drug, just as you have requirement to test your drug, you should also have a requirement of providing samples to anyone wanting to do tests, and lose your permission to sell your drug if you refuse to sell test samples.
(Score: 3, Insightful) by tonyPick on Monday October 26 2015, @10:51AM
If you think the kind of people who we believe could run with the reasoning "If I jack up the price some people will die, but only the unprofitable ones." would see the removal of FDA testing requirements as anything other than an opportunity to sell drugs which will be cheaper to make, but that might not work, you're way more optimistic than me.
(Score: 3, Informative) by Thexalon on Monday October 26 2015, @11:16AM
I do think it's worth pointing out that in some jurisdictions, deliberately ignoring the fact that your actions are likely to kill people qualifies as manslaughter. Of course, he's rich thanks to mommy and daddy, so the laws don't apply to him the way they apply to everybody else.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 5, Informative) by gman003 on Monday October 26 2015, @02:03PM
The pharmaceuticals market has so much regulation already that the free market can't be trusted to handle edge cases like this. And you know what? I'm fine with that.
The basic idea of the regulation is good. First there's the "your drugs have to actually work" regulation - sure, in an ideal free market, people would just not buy the stuff that doesn't work, but in an ideal free market, everyone has perfect information, which is patently untrue of the real world.
So then there's the drug patent regulations, which also make sense. It's a tool to promote drug R&D, and it works. The term is limited, especially for something where development can take over a decade.
But even once the patent runs out, your generic version has to be proven to be equally effective to the one that got full regulatory approval. Again, it makes sense - even though the active molecule is the same, the formulation might not be. What good is a generic drug if, instead of releasing it into your bloodstream, the tablet just goes right on through until you shit it out? So, there's a requirement to prove efficacy - not to the same high bar as developing the drug in the first place, just a relatively basic it-actually-works test.
Then there's the issue of abandoned drugs. Regulations have gotten stricter over time, and some niche drugs were abandoned rather than pushed through the latest regulations. To combat this, if you go through the work of bringing a lapsed generic drug through tests, you get a sort of limited exclusivity.
Pyrimethamine is one of those - it was invented in the 50s, and the disease it mainly treats, malaria, is not particularly common in this country. So it was allowed to fall out of approval, and was eventually brought back when a secondary use was found (treating secondary infections in AIDS patients). So it's a generic drug with only one maker, who has limited exclusivity. I honestly don't know what that exclusivity is, because generic versions could still be made, if they could pass approval.
What current regulations don't cover is that, in situations like this, the one maker of the drug is able to prevent others from gaining approval, by heavily restricting their own distribution. Normally generic drugs are cheap enough that the additional friction costs aren't worth it. But it turns out, in exactly the situation where you most need to approve an alternate formulation (extreme price hikes), those friction costs become negligible.
And while I'm explaining everything, this solution is an exception to the exception - doctors are given leeway to prescribe literally anything, and "compounding pharmacies" are allowed to make any drug to fill a prescription. This company is just producing pyrimethamine for compounding pharmacies to formulate. However, if a patient is prescribed "Daraprim", they can't fill it with a compounded formulation - the doctors have to explicitly write the prescription for "pyrimethamine". And they aren't allowed to advertise it at all. And even then, this does induce an inefficiency cost - the same drug costs mere pennies in countries where it is produced and consumed in large amounts (in Brazil and India, it can be found for $0.05 per tablet). So, while not the "ideal" solution, it is at least minimizing the damage done by the price hike, and it's a lot faster a reaction than getting a formulation approved for marketing.
I think a possible solution would be allowing approval studies in other countries to be used for the US. The same drug is available in the UK, from a major company, for about £0.40 a tablet, and I can't imagine their regulations are so vastly different from ours that a basic study of "this shit actually works, right?" is incompatible. That would certainly help avoid both this situation (it's much harder to get complete distribution control in every major country), and in general (by eliminating some redundant costs to bring a drug to market).
(Score: 2) by pixeldyne on Monday October 26 2015, @10:26PM
In this case it seems the market was faster to react than government. Looks like the solution was to have competition and not regulation (that would help but patients would have to wait much longer).
(Score: 1, Insightful) by Anonymous Coward on Monday October 26 2015, @10:01AM
Am I the only one who on reading the head line wondered about the "Turing pill"? Is it a Turing machine in Pill form? The pill Alan Turing had to take because of his homosexuality? Or what?
Of course the summary cleared that up. But I think the headline should have been tailored for the readership here, most of whom have probably never heard about the company Turing Pharmaceuticals, but know about Alan Turing, or at least know terms like Turing machine, Turing-complete or Turing test.
It would also have been nice to say what this pill is actually for.
(Score: 2) by cmn32480 on Monday October 26 2015, @01:24PM
A fair point. I have made the suggested adjustment. Thanks for pointing out the possible confusion.
"It's a dog eat dog world, and I'm wearing Milkbone underwear" - Norm Peterson
(Score: 2) by gman003 on Monday October 26 2015, @08:28PM
It's an anti-protozoal. If you don't remember high-school biology, protozoa are single-celled animals, like amoebae, which are distinct from bacteria. They're kind of like algae are to plants - single-celled, but still otherwise similar. Regular antibiotics do nothing against protozoa, since they're more like single-celled parasites than a bacterial infection.
The most common worldwide protozoan infection is malaria, but that's essentially eliminated from the United States. Here, it's mostly used in the treatment of AIDS, to stave off opportunistic infections from protozoa like taxoplasmosis.
(Score: 4, Informative) by mmcmonster on Monday October 26 2015, @10:02AM
Recently the FDA allowed drug manufacturers to take a drug back from generic and regain patent protections if the manufacturer does trials on the drug that the FDA mandates.
There are certain drugs that have been generic for decades and never had all the trial data behind them that the FDA requires now for new-to-market drugs.
Things like Digitalis (used to treat several heart conditions) and Colchicine (used to treat some inflammatory conditions like gout). The prices of these drugs skyrocketed recently and will remain high until the agreement time periods lapse and they go back to being generic.
(Score: 3, Interesting) by Gaaark on Monday October 26 2015, @10:57AM
this is another reason the TPP needs to die (or am i reading it wrong).
The TPP wants to extend the length of time it would take before 'generics' can be made, allowing the drug companies to rip people off for even longer.
1. Harper? Dead
2. TPP? Not quite dead. Yet.
--- Please remind me if I haven't been civil to you: I'm channeling MDC. ---Gaaark 2.0 ---
(Score: 0) by Anonymous Coward on Monday October 26 2015, @11:09AM
"Free market" didn't work - adding one prospective player announcing it will undercut the quasi-monopoly hardly makes a "free market". Not until multiple players jump in and drive the price down (and chase the likes of that Shkreli jackass into bankruptcy).
There are other proven, patent-expired drugs with limited market dominated by quasi-monopolies charging non-competitive prices.
(Score: 0) by Anonymous Coward on Monday October 26 2015, @11:41AM
anyone who really thinks Imprimis Pharmaceuticals Inc is any more 'ethical' than Turing is a retard
they're all members of the same club, pig out at the same public trough, rip off the same customers
Imprimis has merely taken advantage of some free publicity to spread their name in connection with a good-will gesture
how many of these prescriptions do you think they sell?
which other drugs do they sell have been jacked up in price to make up the difference?
if you really care about fair prices, lobby your government representative to stop subsidizing all of these bastards. then they might actually have to compete on real merit (or be driven out of business by foreigners)
(Score: 0) by Anonymous Coward on Monday October 26 2015, @01:54PM
I have been thinking about this for a few awhile.
It seems a non-profit who only makes these sorts of drugs seems like a decent way to go. Unfortunately I can not see into the end game of the business that does not subvert its very meaning. Many non profits end up twisted and corrupt. The money is just too much for these people to handle. A gov run facility is no better than a non-profit. The people at the top become twisted and corrupt.
Both the socialist way and the capitalist way devolve into corruption. You can make arguments that one or the other is better. But both do the same thing in the end.
The only 'way' is 'crazy' competition. But that leads to profits which leads to consolidation and detentes with defacto monopolies. A large centralized system leads to poor profits and poor resource utilization with defacto monopolies.
or be driven out of business by foreigners
Which is just a step along the way of consolidation. 'Foreigners' is just your codeword for competition. Do you seriously think a large conglomerate on the other side of the world with lots of cash will say 'oh never mind I am not going to buy them out for the 30 patents they hold and the brand name and the 63 FDA approvals they hold?'
(Score: 0) by Anonymous Coward on Monday October 26 2015, @01:23PM
Has spoken.
(Score: 2) by snick on Monday October 26 2015, @01:49PM
No safety/effectiveness studies required for the compounding pharmacy. So, if you die taking the cut rate pills you can leave a yelp review telling others not to make the mistake that you made.
FREE MARKET SOLVES EVERYTHING!!!