Turns out honesty isn't always the best policy

[Ryujin]

The issues of the drug are not, strictly speaking, a monopoly situation. In fact, the patent on the drug has run out. Anyone can make and sell it under a different name. However, bringing a facility up to speed on production and testing, getting it inspected, and all, would take about six years.

So an effective monopoly rather than a monopoly.

 

[Ovinomancer]

The issues of the drug are not, strictly speaking, a monopoly situation. In fact, the patent on the drug has run out. Anyone can make and sell it under a different name. However, bringing a facility up to speed on production and testing, getting it inspected, and all, would take about six years.

I dislike the cite game, but I can't find where you pulled this from. Given the low margin of generics, it seems off for there to be a six year non-profitable expenditure period prior to the start of sales. The FDA can process a generic application in as little as a few months, depending, and it doesn't take nearly that long to establish a line or testing, even from scratch, for anything else (Boeing built an entire airplane factory for a brand new airframe in my hometown in less than two years, frex), so I'm struggling to grasp where those numbers came from. More than willing to accept I'm wrong, as this isn't exactly my field.

 

[Homicidal_Squirrel]

Not quite. He claimed that he hiked up the price to fund research for new treatments. But generally the industry does *not* up the price of a drug to fund new research - costs are recouped *after* the research is done. If the research doesn't result in a drug on the market, the company writes it off as a loss.

Sure, generally that's how pharmaceutical companies do things. However, it isn't a requirement, and this guy is a former hedge fund manager. I'm thinking he would rather have the money to pay for R&D before doing the R&D. He could definitely be full of BS, but we won't know for sure until he fails to do any R&D with the funds he raises. Well, the funds he would have raised. He decided not to hike up the price to $750. It's not clear what the new price is, yet.

As for him being honest - a previous company (Retrophin) replaced him as CEO over financial irregularities, and is now suing him for $65 million over misuse of corporate funds.

Regarding him being honest, I meant that he was honest in saying that he was raising the cost because money. Seriously, when have you seen anyone be that honest about why they've increased the price of some product? It's rare to see someone do that.

And this is not the first time he has bought rights to a drug, and then jacked up the price - while at Retrophin he did it with the drug Thiola, jacking up the price of the drug 20-fold.

I wouldn't be surprised if he had done it with many other drugs while at Retrophin. Hell, I won't be surprised if he does it many more times with other companies and medications in the future. The thing is, he isn't the only one doing it.

Because:

1) As noted above, he wasn't operating in the way the whole pharma-industry operates. We are talking about a drug that's been in the market since 1953 - if he wanted a cash-cow, this was not a good candidate.

I disagree. This is the perfect cash cow. It's a drug that has already had all the R&D it needed done decades ago. They've more than paid off that cost by now. It's got a small production cost, and after that it's all profit. At $750 per pill, it's a hell of a cash cow. And yeah, it may not be a drug given to a huge population, but it's got enough demand to bring in a nice chunk of change.

2) This is a drug that is in low demand, but is pretty darned essential should you need it. The typical customer is immune-suppressed, most often with HIV, so they are *already* paying a boatload for drugs. Suddenly jacking up a lifesaving treatment from something like $1500 to $75,000 a month is going to raise eyebrows.

Some of the world's most expensive drugs are in very low demand.

My point is that everyone gets riled up and upset about this one guy doing it, but he isn't the only one that puts ridiculous prices for drugs. This is an industry that can do this type of thing because it's perfectly legal for them to do so. If he felt like it, he could hike up the price of this, or any other, drug to $2,000 per pill, and it's perfectly legal.
Why does this guy get all the ire? My guess is it's because he looks and acts like a d-bag. Still, he isn't the only one doing it. He isn't he one that made it possible for this to happen, and continue to happen. People's anger seems to be somewhat misplaced. I think the only person I've heard come out with anything to do something about this is Hilary Clinton. You hear any other politician saying anything or suggesting any fixes? You hear any pharmaceutical company coming out saying that there should be some regulations to help curb this type of behavior?
So yeah, you can get mad at this guy, but get mad at the industry and the politicians that allow this to happen as well.

 

[Homicidal_Squirrel]

Hi,

Hello,

Yes, and we should normally see this, except that, raising the price was not the entirety of what he did.

From: http://www.nytimes.com/2015/09/21/b...se-in-a-drugs-price-raises-protests.html?_r=0

I'm sure it wasn't the only thing. He is in business to make money. I expect him to do as much as possible to make that money.

From that same article, there are other cases of drug price increases. Mr. Shkreli may be an egregious case, but he is not unique.

His statements, however, as presented in several articles, are mostly BS and are indefensible.

Other markets have similar problems. For example:

http://www.businessinsider.com/textbook-price-inflation-2014-4

That's my point. He isn't the only one. It's an industry-wide thing. Any company that thinks it can get away with it would probably do the same. The worst part? There is nothing to stop them. It's perfectly legal. So yeah, people can get angry at Shkreli, but they should get angry at a whole lot more people.

 

[Ryujin]

Well since he's the most recent and egregious actor, he's a viable target.

 

[Homicidal_Squirrel]

Of course he is a viable target. I'm just saying he shouldn't be the only target.

 

[Umbran]

I dislike the cite game, but I can't find where you pulled this from.

I pulled it off my local NPR station this morning, and a check with a couple of my friends who work in biopharma QA. While the formula for the drug is free, the *setup* for the drug still has to jump through FDA hoops to be sure it actually makes what you say it does, at proper levels of purity, so that the product will be safe. This isnt' actually all that expensive, but it is time consuming.

(Boeing built an entire airplane factory for a brand new airframe in my hometown in less than two years, frex)

Nobody is *swallowing* that airframe to help them beat off disease

The thing being that the design of the airframe had already been through lots of testing for safety before manufacture begins. The manufacturing process has quality controls, but is pretty much the same as for any other airframe - a weld is a weld, a rivet is a rivet. The processes used to assemble a Boeing 747 is much the same as that used for an Airbus A320. The manufacturing process for each drug is its own thing that must be vetted separately.

 

[Ovinomancer]

I pulled it off my local NPR station this morning, and a check with a couple of my friends who work in biopharma QA. While the formula for the drug is free, the *setup* for the drug still has to jump through FDA hoops to be sure it actually makes what you say it does, at proper levels of purity, so that the product will be safe. This isnt' actually all that expensive, but it is time consuming.



Nobody is *swallowing* that airframe to help them beat off disease

The thing being that the design of the airframe had already been through lots of testing for safety before manufacture begins. The manufacturing process has quality controls, but is pretty much the same as for any other airframe - a weld is a weld, a rivet is a rivet. The processes used to assemble a Boeing 747 is much the same as that used for an Airbus A320. The manufacturing process for each drug is its own thing that must be vetted separately.

We're talking last each other, but that's fine.

On the plant side, yes, I had already assumed that the design was fine and that the only match was to build very complex things and have the extensively quality controlled throughout. That you swallow one and hurls through the air with hundreds of people in the other is a red herring -- they're both highly complex within their fields that require extensive quality control at every step.

On the approval side, the FDA has an abbreviated process for genetics that takes less than a year to accomplish. Pretty sure you can retool a line or even build one in that approval process time, out slightly longer. I'm still wondering where the six years timeframe came from as the long lead time is FDA approval and its not very long for generics.

 

[Umbran]

That you swallow one and hurls through the air with hundreds of people in the other is a red herring -- they're both highly complex within their fields that require extensive quality control at every step.

Yes, but the operating principles of all airframes are the same, and the construction methods are a limited, well-understood list. The production line for each drug is a one-off for that drug that may not bear a whole lot of resemblance to the lines for other drugs.

On the approval side, the FDA has an abbreviated process for genetics that takes less than a year to accomplish. Pretty sure you can retool a line or even build one in that approval process time, out slightly longer. I'm still wondering where the six years timeframe came from as the long lead time is FDA approval and its not very long for generics.

While I trust NPR to generally have its facts straight, you may take it with a grain of salt, if you wish. My biopharma QA friends didn't think the timeline sounded off - it takes time to develop and qualify the QA process for the production lines. There are a lot of picayune details, including things like, "how do we clean the production apparatus, and how do we certify that contamination of the vessels is below the required guidelines," and such. Those apparently don't come in stock form, like inspection of welds in airframes do.

 

[Umbran]

Sure, generally that's how pharmaceutical companies do things. However, it isn't a requirement, and this guy is a former hedge fund manager.

Being a former hedge fund manager says to me he is *less* likely to be operating in accordance with industry norms, not more.

I'm thinking he would rather have the money to pay for R&D before doing the R&D.

Well, then perhaps he should find himself some venture capitalists or investors, rather than trying to take it out of the pockets of immune-suppressed patients.

He could definitely be full of BS

Yeah, about that - having asked around a bit, it seems there's no *medical* reason to develop a new drug for toxoplasmosis. The drug in question is 60 years old, and is still used because it works well and isn't very expensive. So, his excuse that he wanted to develop new treatments seems to lack a solid basis.

At $750 per pill, it's a hell of a cash cow.

Only if people can/will pay that price. Insurance companies may not cover the increased cost, and the patients, already on a rack of other expensive drugs, likely don't have the funds.

Some of the world's most expensive drugs are in very low demand.

And? None of those cited drugs have been on the market for more than a decade. The drug we are talking about now has been around for half a century longer than any of those.

And, are any of those drugs really comparable? Politifact says, "No."

My point is that everyone gets riled up and upset about this one guy doing it, but he isn't the only one that puts ridiculous prices for drugs.

No. And this is *hardly* the only complaint about the high price of drugs.

This is a particular case of a drug that has not been high priced in living memory, that jumped by 5000% in price. This is not comparable to a drug that is fairly new, and has never been low-priced. It is a new, slightly different case, and thus gets new, separate attention.

Why does this guy get all the ire? My guess is it's because he looks and acts like a d-bag.

I doubt his physical appearance has much to do with it. It got attention because it was a *change*. That drugs are expensive is nothing new, so it doesn't pop up on news unless there's something new to the story, like a political campaign, or a particularly egregious example like this one.

People's anger seems to be somewhat misplaced. I think the only person I've heard come out with anything to do something about this is Hilary Clinton. You hear any other politician saying anything or suggesting any fixes?

Well, the price change came in August, and good policy changes take time to develop. I hope/expect Clinton's policy was already in the works before this happened, as it is a realistic thing for her to have for her campaign, and she's nothing if not well-planned. So she could whip it out when the story hit. And the GOP is not known for policies to curtail corporate overreach.

You hear any pharmaceutical company coming out saying that there should be some regulations to help curb this type of behavior?

No, but since when do we ever expect to hear companies suggest reasonable self-regulation?

So yeah, you can get mad at this guy, but get mad at the industry and the politicians that allow this to happen as well.

I think you are mistaking, "This is the current example of people being mad at the industry" for "this is the *only* example of such". And, you can lump many people's dislike for the GOP on their policies with regards to regulation of companies, and their approach to health care in general as lacking.

So, really, your suggestion that folks are somehow off on this topic doesn't seem to hold water, to me.