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?
Related Stories
His early release reflects good behavior and completion of rehabilitation programs
Infamous ex-pharmaceutical executive Martin Shkreli has been released from federal prison after serving less than five years of a seven-year sentence for a securities and wire fraud conviction. He is now moving into a US Bureau of Prisons halfway house at an undisclosed location in New York until September 14, 2022.
Shkreli was convicted in August 2017 on two counts of securities fraud and one count of conspiracy to commit securities fraud in connection to what federal prosecutors called a Ponzi-like scheme involving two hedge funds Shkreli managed. In March 2018, a federal judge sentenced him to seven years, which he was serving in minimum security federal prison in Allenwood, Pennsylvania.
His early release—slightly more than four years after his sentencing—reflects time shaved off for good behavior in prison, plus completion of education and rehabilitation programs, according to CNBC. It also includes a credit for the roughly six months he spent in jail prior to his sentencing.
Previously on SoylentNews:
United States Sells Unique Wu-Tang Clan Album Forfeited by Martin Shkreli
Judge Denies Shkreli's "Delusional Self-Aggrandizing" Plea to Get Out of Jail
Shkreli Stays in Jail; Infamous Ex-Pharma CEO Quickly Loses Appeal
Martin Shkreli Accused of Running Business From Prison With a Smuggled Smartphone
Sobbing Martin Shkreli Sentenced to 7 Years in Prison for Defrauding Investors
Britain Fines Pfizer Record £84.2m for 2600% Drug Price Hike
Daraprim Price Lowered in Response to Outrage
Cost of Daraprim Medication Raised by Over 50 Times
(Score: 1) by fustakrakich on Friday December 09 2016, @04:09PM
This is couch change.
La politica e i criminali sono la stessa cosa..
(Score: -1, Troll) by Ethanol-fueled on Friday December 09 2016, @04:19PM
What they should do is jack up the prices for all drugs 1,000,000% for Africa and the Middle East, and lower the prices for everybody else.
Win-win, we get cheaper drugs and more planetary dead-weight dies off.
(Score: 1, Informative) by Anonymous Coward on Friday December 09 2016, @05:33PM
Don't forget all those dirty gandhis, gooks and white niggers in russia. That whole african-asiatic area is a fucking toilet in need of a flushing.
(Score: 1, Funny) by Anonymous Coward on Friday December 09 2016, @05:52PM
And you are contributing to humanity oh so greatly, aren't you. Piss off.
(Score: 3, Insightful) by Azuma Hazuki on Friday December 09 2016, @06:15PM
This one wasn't up to your usual standards, low as that bar is. It's not obvious you're trolling; now it just sounds like you're another refugee from /pol/. You may want to change up your material a bit.
I am "that girl" your mother warned you about...
(Score: 2) by edIII on Friday December 09 2016, @11:06PM
I agree. I usually envision him standing in full Nazi uniforms shouting with his fist held high. Today, it was as if he was in dirty underwear, on a couch, eating Cheetos, while just phoning it in.
Like you, I demand my bigotry and fascism to have some panache ;)
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 2) by Azuma Hazuki on Saturday December 10 2016, @03:55AM
Funny, I usually envision him in Cheetos-eatbeast mode. Today was more like "woke up three hours later, had to shit, shit the bed, threw it at my computer screen, went back to sleep."
I am "that girl" your mother warned you about...
(Score: 0) by Anonymous Coward on Saturday December 10 2016, @05:38AM
Guess you didn't notice, EF's guy [soylentnews.org] won the U.S. election. EF can ride the gravy train until 2025. That Mexican pussy [soylentnews.org] is gonna dry up though.
(Score: 2, Insightful) by Anonymous Coward on Friday December 09 2016, @04:26PM
Instead of the "Supply and demand" business model, it's the "How much money you got?" business model. Just like a crooked mechanic in a one light town.
(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.
(Score: 3, Interesting) by Runaway1956 on Friday December 09 2016, @04:36PM
How about doubling that fine, each day that the prices remain that high? The fine gets reduced by however much they reduce the prices. FFS, governments need to tame big business. I don't mean sleep with big business, but TAME big business.
“I have become friends with many school shooters” - Tampon Tim Walz
(Score: 2) by ikanreed on Friday December 09 2016, @04:44PM
The EU has been pretty consistent about doing exactly that to keep corporations in line.
I don't know if post-brexit, tory-controlled UK will do the same, but they're not as far gone with free-market obsessed lunatics as the American republicans.
(Score: 3, Insightful) by frojack on Friday December 09 2016, @06:35PM
Why would you couch that in terms of free-market bashing when there is not any free market in the entire field of medicine? The free market in medicine has been outlawed entirely in the US, the EU, and the UK.
Think you can start a company and make generic versions of drugs that have expired patents?
Guess again. It will take you 5 years to get government permits to market drugs. It will take 10 years to clear the lawsuits that you will attract.
There is no free market in drug manufacture and sales.
No, you are mistaken. I've always had this sig.
(Score: 2) by ikanreed on Friday December 09 2016, @06:41PM
Just because it doesn't exist doesn't mean there aren't idiots making laws with the assumption that it does.
Republicans are very dumb.
(Score: 2) by hemocyanin on Friday December 09 2016, @04:48PM
You're mean. exponential on one side, simple subtraction on the other. ;-)
The fine should be big, but I sometimes wonder if the government loves this scenario. Government is basically a third wheel in this transaction but it makes a tidy profit by fining the gouger. Next, the fines aren't typically big enough to damage the company, so it doesn't honestly mind (despite woe-is-me public protest) when compared to all the other times it got away with gouging without consequence. The only party that really needs help, the consumer, is the one who gets totally screwed - the consumer either forgoes the medication or pays the massive hike and never gets reimbursed - it's like a hidden sales tax.
(Score: 2) by bob_super on Friday December 09 2016, @05:34PM
Did you miss the part where the UK government actually provides healthcare to the Queen's subjects?
And the healthy subjects provide the tax which pays for the government.
So the government isn't a random third party, it's got a vested interest.
(Score: 2) by hemocyanin on Saturday December 10 2016, @01:22AM
That's a fair point. How about when this kind of thing happens in the US though?
(Score: 3, Funny) by Azuma Hazuki on Friday December 09 2016, @06:18PM
Now what kinda pinko Commie lib'rul terr'ist atheist Mexican Muslim Jew hippie bullshit're YEW spoutin' boy?! Free market uber alles! Burdensome regulation! Job creators! The poor deserve their suffering! Wharrrgarbl!
...gee, it's almost like you're getting halfway reasonable in your old age. Watch your back, lest our resident alt-right divas start calling you "cuck."
I am "that girl" your mother warned you about...
(Score: 2) by Runaway1956 on Friday December 09 2016, @06:28PM
Alright - free market. I'll go with that. Free market - no more patent and copyright encumbered monopolies for the pharmaceuticals. They make a new drug, and as fast as they can get it into production, THERE ARE GENERIC VERSIONS AVAILABLE!!
Pharmaceuticals really don't want a free market, and we both know that.
“I have become friends with many school shooters” - Tampon Tim Walz
(Score: 0) by Anonymous Coward on Friday December 09 2016, @11:20PM
This is the stupidity of how the NHS has been carved up into discrete units, though; if the Department of Health rocked up to Pfizer or whoever and said "We need $BIGNUM of those and we'll pay a penny each, and if you don't play ball we'll piss off to India and ask one of their pharmaceutical companies" then you can guarantee it wouldn't take long for them to roll over. What we have is the ridiculous situation where each individual hospital or trust (i.e. a group of hospitals) each go to *predetermined suppliers* and buy stuff in piles that are orders of magnitude smaller, each getting quoted a different price and sometimes these have *huge* variations.
The latest wheeze is Sustainability and Transformation Plans (STPs), which will ultimately render down to "who can we afford to sack and who can "absorb" their work". Sensible procurement at a national level could save a metric fuckton of money, but of course that isn't the way to get "inducements" from the private sector, is it? The NHS is suffering the death of a thousand cuts and by the time people wake up to this, it'll be too late to save it.
(Score: 2) by edIII on Friday December 09 2016, @11:11PM
How about we don't fine the company at all, but fine every executive above a certain level 3% of yearly salary per day until the price changes?
Make the executives and shareholders have to pay directly out of their own pockets as individuals.
I would take it further too, like registering sex offenders. We should register avaricious parasites so that when they go to other companies they need to formally inform people that they're pieces of avaricious shit :)
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 2) by Thexalon on Friday December 09 2016, @11:23PM
Why? These people aren't exactly quiet about what they're doing. They know they're saying the equivalent of "Your money or your life?", and they are compensated accordingly. And they brag about what they're doing in these obscure things called "quarterly reports".
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 2) by edIII on Saturday December 10 2016, @01:05AM
*sigh*
You're right.
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 2, Interesting) by Tara Li on Friday December 09 2016, @04:36PM
Are these fines big enough to actually do anything? After all, if you make $1B profit, and get hit with a $100M file, you're still $900M ahead - hell, if it's not actually against the *law*, you could argue that the corporations have a fiduciary responsibility to do it, to deliver as much value to the shareholders as possible.
And yet - I really don't want a government agency deciding how much a drug is allowed to cost, either. That's just asking for a race to the bottom as interest groups whine about how deserving their group is that is disproportionately in need of a particular drug... First it will be forcing the price so low that *no* company will be interested in making it, then will come legislative requires forcing a company to make it...
(Score: 0) by Anonymous Coward on Friday December 09 2016, @06:05PM
Businesses intentionally break the law all the time. If the gains are greater than the potential losses they have no reason not to. See VW for a recent but not unique example.-
The law doesn't mean squat. As always, it's all about money.
(Score: 2) by fido_dogstoyevsky on Saturday December 10 2016, @06:21AM
[the government] will be forcing the price so low that *no* company will be interested in making it, then will come legislative requires forcing a company to make it
Just the cost of doing business as a drug manufacturer.
It's NOT a conspiracy... it's a plot.
(Score: 3, Interesting) by tfried on Friday December 09 2016, @04:52PM
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?
Two things here: First, the point is not to hurt "the company", but to render destructive business practices such as this unprofitable. Well, less profitable, at least.
Second "passing on the cost" is totally the wrong mental model, here. The companies generally are profitable, even taking a lot of peanuts like this into account. At the same time they will always look for ways to bolster their profitability, which can be done in many ways - good and bad - including trying to sell at the highest price the local market and/or local authorities will allow. If they think that being an asshole pays off - for this or other drugs, in the US or elsewhere - they will be assholes in that market, irrespective of their overall profitability.
(Score: 2) by AthanasiusKircher on Saturday December 10 2016, @03:16AM
I have to admit I'm rather confused about what distinction you're trying to draw in your first point, and while I agree with your second, I'm not sure it precludes my postulated behavior either.
I didn't said the point of fines was to "hurt a company" but to hurt the company's "bottom line," which as far as I know is a synonym for profitability (implicitly, we're talking about profitability from the behaviors in question, since that's the point of regulation). I really don't understand the distinction there.
As for the second point, yes, that's true... But we all know companies are beholden to shareholders and investors, and IF a fine hurts profitability in one market, management will likely try to increase it elsewhere, no? And if profits are largely based on excessive price hikes in generics, and one market says they won't allow it, to maintain the same profitability in that sector, the may in fact try to make it up elsewhere... I'm not saying there would necessarily be a direct correlation for prices of drug X going down one place and rising in another, but we do KNOW that drug companies operate like thus at least in some circumstances, pricre-gounging in the markets it can to fund R&D if it can't get those prices somewhere else.
(Score: 2) by tfried on Saturday December 10 2016, @08:39AM
Well, the point about "hurting the company" may really be a bit subtle, and we may well be on the same side of it from the start. I'll still try to explain: It does not make sense to see a company similar a natural person. A natural person who violates the law (severely) you will put into jail for various reasons. There is not generally much of a point in "taking revenge" on a company, though. Esp. the size of Pfizer they are a totally diverse conglomerate of things, some of which a very benefitial, and some of which are just plain wrong. You want to target the wrong ones, selectively.
There are practical consequences to this hairsplitting: It means it does not matter that the fine may be peanuts on the level of Pfizer the whole company (or Pfizer's bottom line, if you like). It's totally enough that it hurts the profitability of the price hike strategy, selectively. If you can credibly achieve that, you can reasonably expect Pfizer (and other actors) to draw the consequences.
The second point, again: A company is never working to maintain profitability, it is always working to maximize profitability. If it believes strategy X will generate profit in market A, then it will go for it. Not because it has to make up for losses in market B, or segment Y, not because it has to fund R&D, but because. It does not need any "cause" for seeking to maximize profits. These things are entirely independent.
Thus, if Pfizer believes it will be long-term profitable to go for a price hike strategy in the US, then it will do so. Irrespective of what happens in the UK.
Of course the pharmas will be eager to point out that they do need to make profits in order to fund R&D, and that is a valid point not to overlook. Importantly, though (and particularly in the present context), any pharma's R&D spending will depend entirely on the expected ROI of the research spending itself (i.e. the expected profitability of the expected new products). Not on the amount of "free profits" they can squeeze out of existing products.
(Score: 3, Interesting) by archfeld on Friday December 09 2016, @05:22PM
The corporations feel free to pick and choose which nations to store their profits and hide from taxes, how about we the people feel free to pick and choose from where we buy the goods and services we want and choose the market with the 'best' price. If the big pharma companies can choose what is in their best interests why can't the consumers do the same ?
For the NSA : Explosives, guns, assassination, conspiracy, primers, detonators, initiators, main charge, nuclear charge
(Score: 2, Insightful) by Anonymous Coward on Friday December 09 2016, @05:59PM
>... why can't the consumers do the same ?
How is this different from USA residents buying drugs from Canada or Mexico? Of course our own FDA frowns on this and claims that it's illegal because drugs for sale in the USA have to pass their safety testing. Personally, I have the feeling that the FDA has been lobbied by big pharma to help keep the drug companies in a monopoly position.
Note, this only applies for drugs you buy yourself. If you are in the hospital, you are not in a position to do any price shopping, you get what the dispensary has and you pay the price (with any luck, your insurance beats the price down somewhat after the fact). Hard to imagine anything further from "free markets".
(Score: 0) by Anonymous Coward on Saturday December 10 2016, @07:38AM
I wonder what would happen when:
then the USA counters with: You did not pay your taxes to us... sorry, our copyright and patent law do not apply in this case... You pay your property tax in order to have your rights recognized... you avoided the tax... so we also fail to recognize your rights in this manner.
Please take this matter up in the country you paid your taxes to.
(Score: 2) by archfeld on Saturday December 10 2016, @02:07PM
In a digital world it is more than just physical property, how about taxes owed on general income ? I really find it hard to consider a corporation any nationality, they are traded on stock markets all over the world. I'd consider most of them as nations unto them selves, or extra national.
For the NSA : Explosives, guns, assassination, conspiracy, primers, detonators, initiators, main charge, nuclear charge
(Score: 0) by Anonymous Coward on Friday December 09 2016, @06:42PM
CMA said that because epilepsy patients who are already taking phenytoin sodium capsules would not usually be switched to other products, including another manufacturer’s version of the product, the NHS had no alternative but to pay the increased prices for the drug.
I'm not in the UK, but that seems like bullshit. Why wouldn't the NHS be able to switch over to a generic?
Pfizer decides to stop selling a drug that is "loss-making" (possibly due to the fact that it was "subject to price regulation") in the UK and sells its distribution rights to some UK-based company. Pfizer continues to make the drug (now a generic under the UK's rules), but due to the lack of competition from other generic manufacturers, can sell it to distributors at a higher price and make money from the drug.
I can't really blame Pfizer too much for this situation. I mean, did the UK really expect Pfizer to continue making a drug for them even when they are loosing money?
Maybe there needs to be a rule that generics prices should be manufacturing cost + X% and the government could provide subsidized loans for start-up costs. Another possibility could be that the government could fund a generic drug manufacturing center and make the drugs by themselves.
(Score: 0) by Anonymous Coward on Friday December 09 2016, @07:00PM
I think you are onto something with the last sentence.
I would change it to: have the govt contract a production run (from a drug manufacturer) of X kg of a generic drug that has less than 3 committed suppliers on the commercial market.
(Score: 2) by xpda on Friday December 09 2016, @07:41PM
Pfizer made more than 350 times that amount in the past three years, AFTER taxes.
(Score: 3, Informative) by aclarke on Friday December 09 2016, @08:20PM
The quote is actually "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 behaviour." Source: the rest of the internet.
Let's not misspell words in direct quotes please. It's a British story, with British spelling.
Thanks,
- The rest of the non-American English-speaking world.
(Score: 2) by AthanasiusKircher on Saturday December 10 2016, @03:43AM
While I have nothing against British spelling (and I completely understand the annoyance at American spelling taking over more and more news sources), the quote is pasted directly from Reuters, though I know Reuters sometimes publishes separate US and UK versions of its stories... So perhaps this is just a variant.
Regardless, it's implied the quote was spoken, in which case style guides would prescribe that one follow the spelling/formatting of the article overall, rather than shifting spelling to try to approximate whatever style guide the speaker might follow. If I were reporting a spoken quotation from a French person, I wouldn't eschew quotation marks in favor of guillemets, for example. Nor would I go down the rabbit hole of trying to figure out which spelling to use if interviewing a German who speaks English with a British accent. You just use the overall style of your writing.
By the way, it's clear that an American style guide is used for this Reuters link, since the quotations you mention place the punctuation inside...
(Score: 0) by Anonymous Coward on Friday December 09 2016, @09:43PM
Regulations for selling off a prescription drug product line should cap the annual limit pricing (let's say 15 percent for each of the first three years), to allow a relatively smooth transition for patients, and the opportunity for other players to step into the market.
(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?