[The] boyish drug company entrepreneur... ignited a firestorm over drug prices in September and became a symbol of defiant greed. The federal case against him has nothing to do with pharmaceutical costs, however.....Hated, but not arrested for the thing he is hated for.
December 17, 2015
Martin Shkreli, 32... "who rocketed to infamy by jacking up the price of a life-saving pill from $13.50 to $750..."
"... was arrested by federal agents at his Manhattan home early Thursday morning on securities fraud related to a firm he founded."
Subscribe to:
Post Comments (Atom)
Posts
59 comments:
I certainly understand the anger, as for a lot of people the price increase likely means not being able to get that drug or going broke trying to stay alive. On the other hand, suppliers will always charge what the market will bear, and if he paid a premium for the rights to it he clearly will want to get as much as possible out of it. How much of an increase would be "too much" for public perception? If he'd raised the price to $20, there still would have been a lot of grumbling, but it probably wouldn't have made headlines.
The thing is, no one will make too much noise if you "overcharge" for a luxury car or jewelry. What fires them up about this is the fact that it's a life-saving drug, and it was previously available for $13. Had it just come on the market at $750, he probably could have argued that this was necessary to pay for the R&D and risk (as often they spend a lot of R&D with no successful drug and have to eat those costs). It was a public relations mess, but I'm not sure whether that matters to this guy (I don't think good PR is something he needs for what he does).
Show trial.
But what about the Clintons?
"Hated, but not arrested for the thing he is hated for."
Perhaps it was the hatred that prompted the district attorney to examine Shkrelli's other business dealings for plausible misdeeds.
I wonder if he would have been arrested had there not been the brouhaha about the price jackup. I still do not understand how he could have done this on an out of patent drug. Oh, yeah. Govt collusion.
In any event, not knowing anything about what he was arrested for beyond the news article I see two possibilities:
1) the charges are flimsy and are just a tool to bludgeon him into lowering his pricing.
2) Because of the pricing, the govt starting looking deeply into the guy for anything questionable they could find. They found this and the charges are legitimate.
3) This is something that would have happened anyway.
I think it teaches us all a strong lesson. Never annoy the govt. We commit 2 felonies a day, supposedly. Normally the govt leaves us alone and is happy just to know that they can indict anyone anytime.
And even if we didn't commit a felony, we can still be indicted and spend ourselves broke fighting the charges until we plead guilty to something less.
Always good to bear this in mind:
“Did you really think we want those laws observed?" said Dr. Ferris. "We want them to be broken. You'd better get it straight that it's not a bunch of boy scouts you're up against... We're after power and we mean it... There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What's there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced or objectively interpreted – and you create a nation of law-breakers – and then you cash in on guilt. Now that's the system, Mr. Reardon, that's the game, and once you understand it, you'll be much easier to deal with.”
John Henry
Not surprising. If it floats like scum, slithers like scum, and talks like scum, it's probably scum and likely to do scummy things all over.
How badly he's hated for the pharma stunts may help his legal defense though, as David above illustrates.
Had it just come on the market at $750, he probably could have argued that this was necessary to pay for the R&D and risk (as often they spend a lot of R&D with no successful drug and have to eat those costs).
I heard an interview with the guy a couple months ago. This is more or less what he was arguing.
1) It is not a high volume drug so not a lot of money in it, even at $750
2) It is not terribly effective and has some serious side effects
3) His company is working on a better replacement and needs the money to fund that R&D.
I don't know the details or the truth of the above. If they are working on a new drug, it can cost hundreds of millions to get it to market, much of it regulatory related. Where does that money come from?
Or maybe, with govt help, he really is ripping everyone off.
John Henry
Why don't some of the people complaining about the cost start up a company to make the drug, and they can charge people $25.00 and make a fortune.
Everyone is guilty of some crime in today's world - if you give the Fed's a good reason to look for yours, they'll find it.
Hillary's reaction to the Shkrelis of the world will kill more people than the Shkrelis ever will.
"Show trial."
If there is evidence to support the indictment of securities fraud, it's not a show trial but a (regretfully) all-too-rare example of the appropriate authorities taking proper action.
"...no one will make too much noise if you 'overcharge' for a luxury car or jewelry. What fires them up about this is the fact that it's a life-saving drug, and it was previously available for $13."
This drug is not a luxury car or jewel but a health necessity for many people. The drug was cheap, had been cheap for many years, and involved no development expense to Shkreli. He's a price-gouger, pure and simple. He is no different than someone with cheap access to an endless supply of water selling bottled water for $750.00 a bottle in disaster areas of the country where the drinking water has become unsanitary. To excuse it because "it's the price the market will bear" is an indictment of capitalism.
Federal agents are really trying to free the Wu-Tang Clan.
The Feds have a ninety plus percent conviction rate so his guilt or innocence in the instant case is irrelevant. They will bankrupt him at the very least and will likely get jail time as well. Leona Helmsley and Martha Stewart learned what it meant to get cute and bitchy inNY. It is this guys turn. You cannot get cocky with the Feds. Ask Conrad Black.
Sarah's mind once again slipped wistfully into the past, to that One Hot Summer in 1957 in Madison County...
"Miss Sarah, I has a question..."
"Yes, my sweet Mandingo?"
"When a white person goes to the grocer a tin of oatmeal costs twelve cents, right?"
"That's right."
"Well, I went today and Mr. Brown the grocer told me the cost for a tin of oatmeal is twenty-five cents for a Negro. How can that be?"
"Oh, my silly Mandingo: that's the Free Market."
"But it wasn't Free, it was twenty-five cents."
"No, no: the Free Market just means someone can charge whatever they want for something."
"So Mr. Brown charging Negroes more is fair?"
"Why, of course, my Mandingo. If you don't like it you can take your business elsewhere."
"But he's the only grocer in town."
"Well, you might have to go to another town to find less expensive oatmeal. But it might be more expensive somewhere else, too -- you never know."
"But shouldn't the price of oatmeal just be the price of oatmeal?"
"Oh dear, Mandingo, you're starting to sound like a Communist. You're not a Communist now, are you?"
"No, Miss Sarah, no! I'm an American."
"Well, you're not quite an American, my Mandingo. You're a Negro that lives in America."
"Is there a difference, Miss Sarah?'
"It's always different for Negroes, Mandingo. For Chinks, too."
"What about Retards, Miss Sarah? Is it different for them?"
"My silly Mandingo: a Retard is still an American, provided that he's a White Retard."
"All I wanted was to buy oatmeal at the same price as white people do, that's all. I don't want to be a Communist."
"My Mandingo, you people used to get your oatmeal for free, you know?"
"We did, Miss Sarah?"
"When you were still Slaves, silly. The Master bought everything for you."
"Freedom sure is expensive, Miss Sarah."
"You can't have it both ways, Mandingo."
"I thinks there is only one way the Negro gets it Miss Sarah, and that is the Negro gets it hard..."
"My silly Mandingo, if God wanted it to be easy for you he would have made you white..."
I am Laslo.
"ddh said...
"Hated, but not arrested for the thing he is hated for."
Perhaps it was the hatred that prompted the district attorney to examine Shkrelli's other business dealings for plausible misdeeds."
Yep. See also: Martha Stewart, Al Capone.
If only it had been birth control, then it would have been free. Win win for everyone.
Does the name Al Capone ring a bell?
Karma. I knew eventually she'd get him, but this was quick work.
Hated, but not arrested for the thing he is hated for.
Can we also claim he was not arrested because he was hated? We are certainly only reading this story because he was hated. How far does the motivation go?
"This drug is not a luxury car or jewel but a health necessity for many people. The drug was cheap, had been cheap for many years, and involved no development expense to Shkreli. He's a price-gouger, pure and simple. He is no different than someone with cheap access to an endless supply of water selling bottled water for $750.00 a bottle in disaster areas of the country where the drinking water has become unsanitary. To excuse it because "it's the price the market will bear" is an indictment of capitalism."
Whether it is a luxury good or a necessity (and with many products, there's no bright line between the two) is irrelevant--the market is the market and he will charge whatever he can for it. The issue here is why is he able to charge so much? The answer is either because he has patent protection for his product (in which case you have to weigh the benefits and burdens of IP protection--does it encourage inventions or discourage people making use of them?) or the development and distribution costs for competitiors is too great. Because obviously if someone else could profitably sell this drug for $13, they'd swoop in and drive this guy out of business. Your question should not be "why is he doing this" but "why is he able to do this without being undersold".
The last thing we need to add to the health care market is price controls. Ultimately those will only mean fewer products available at all (so instead of paying hundreds of dollars for that pill, you pay nothing, because no pill). Instead, ask yourself how the free market can be used to address the shortage that enables such price increases.
Shkreli. Wasn't he the brother of Sarek and uncle to Spock, Spurk, Shlok and Spink?
Robert cook: "The drug was cheap, had been cheap for many years, and involved no development expense to Shkreli"
Could you provide a link so we can examine the business case financials for this drug?
Thanks in advance for not even understanding the question.
The Pharma Bro looks a little delicate to do any real time.
He's a price-gouger, pure and simple. He is no different than someone with cheap access to an endless supply of water selling bottled water for $750.00 a bottle in disaster areas of the country where the drinking water has become unsanitary. To excuse it because "it's the price the market will bear" is an indictment of capitalism.
Well in Comrade Cookie's world, there will be no water in the disaster area, because the worker's in the bottling factory are all drunk, and barely work, what little bottled water is produced goes to the cadre at the top and the drinking water is always unsanitary.
Capitalism is awful, but it is infinitely better than all of the alternatives.
This guy's greed gets a lot of attention, but what about the people who had been producing the drug before? Why did they stop? Wasn't their sale of the business to him entirely greed-driven as well?
John said...
Oh, yeah. Govt collusion.
Apparently so:
wikipedia
++
The price increase has been fiercely criticised by physician groups such as HIV Medicine Associates and Infectious Diseases Society of America.[28]
In India, over a dozen pharmaceutical companies manufacture and sell pyrimethamine tablets in India, and, multiple combinations of generic pyrimethamine are available for a price ranging from US$0.04–$0.10 each (3–7 rupees).[29][30][31][32]
In the UK, the same drug is available from GSK at a cost of US$20 (£13) for 30 tablets (approximately $0.66 each).[33]
As of September 2015, Daraprim imported directly from GSK UK is available for less than US$7 per tablet.[34]
In Australia, the drug is available in most pharmacists at a cost of US$9.35 (A$12.99) for 50 tablets (approximately US$0.18 each).[35]
In Brazil, the drug is available for R$0.07 a pill, or about US$0.02.[36]
In Canada, the drug was reportedly discontinued in 2013 but hospitals may make the drug in-house when it is needed.[37]
On October 22, 2015, Imprimis Pharmaceuticals announced it has made available a formulation of Pyrimethamine and Leucovorin in oral capsules starting as low as $99.00 for a 100 count bottle. [38]
++
If hospitals in Canada can make it, why can't hospitals in the US do the same thing?
The drug is not protected by patents in the US or elsewhere. If it is not available here, there is a market failure.
https://en.wikipedia.org/wiki/Folinic_acid
https://en.wikipedia.org/wiki/Sulfonamide
https://en.wikipedia.org/wiki/Pyrimethamine
"Pyrimethamine has been available since 1953,[3] and is not subject to any unexpired patent."
If the market fails, the first suspect you should go harass is the US Government.
The drug is not protected by patents in the US or elsewhere. If it is not available here, there is a market failure.
https://en.wikipedia.org/wiki/Folinic_acid
https://en.wikipedia.org/wiki/Sulfonamide
https://en.wikipedia.org/wiki/Pyrimethamine
"Pyrimethamine has been available since 1953,[3] and is not subject to any unexpired patent."
If the market fails, the first suspect you should go harass is the US Government.
Gahrie said...
Capitalism is awful, but it is infinitely better than all of the alternatives.
True, but capitalism definitely isn't the mechanism determining the price of this drug.
Cook: He is no different than someone with cheap access to an endless supply of water selling bottled water for $750.00 a bottle in disaster areas of the country where the drinking water has become unsanitary
You left out the part about the government preventing people from getting their water elsewhere.
"Hated, but not arrested for the thing he is hated for. "
Not for but maybe because of?
This investigation has been going on for years, well before the business (in September) about the price hike. There is a parallel investigation by the FTC started in 2012. There is no way that the Justice Department could mount a prosecution in a case this complicated in just a few months.
Maybe we can do without all these 1%-ers. Imagine life without them. Soviets tried this (living without price signals and all their evil and effect on G. meant 3 or 4 generations of 300 million people lived with bad shoes, vehicles, appliances, you pick it, anything not desired or otherwise "free" by the state. Great weapons. some art and books. that's it. I for one would like a world without a Steve Jobs or Bill gates and all the time waste their billions of consumers created. For every 1%er there are billions that demanded their products. So the 1% war, is a war on the least of us. Terrible ideas like "computers for the rest of us" don't you understand as few can go genuflect at the IT departments mainframe altar. "Want a new report? Stand in line." Think of how many were killed because medical research efforts were diverted to Aids, etc. These special interests have Consider how inexpensively Mr. O's old friends, the Castros, solved this problem. Especially amazing since that community is so powerful and rich they need not have pulled the government levers for a solution, they could have paid for it themselves, rather than corrupting government even further (granted, the constitution was already a writhing in death document at the time, what could those dead white, slave-owning guys know about the unchanging nature of humankind?. I'm surprised he didn't demand $7,500 for an ineffective drug like the 9 out of 10 others who attempt this, sacrificing their homes and lives for something they really believe in (doing well by attempting to do good) then he'd be out of business as our his peers.
Hated, but not arrested for the thing he is hated for.
That was legal, but it is maybe not a coincidence that he was also guilty or alleged to be guilty) of some violation of the penal code related to making a lot of money.
You left out the part about the government preventing people from getting their water elsewhere.
It's not technically doing so - there is no patent any more and hasn't been for around 40 years - but the quality and supervision regulatiosn are now such so that it costs a tremendous amount of time and money to get into the business, and it is not worth it.
Even when the pprice is raised like this. The monopolist can drop the price back down to $13.50 any time he wants to. (Actually more than $13.50. He paid something for the FDA approved factory.)
There is a loophole to avoid the monopoly. Compounding pharmacies, which make pills specially to order. But that is less safe.
Shkreli is taking advantage of FDA rules. Read Derek Lowe's posts on him and Turing Pharm if you want to know. If not feel free to continue to make fools of yourselves.
This is not a market failure or a failure of capitalism. It is a failure of government regulation. Fix the government regulations and market capitalism fixes the problem.
No, not 40 years ago. Daraprim's patent exppired in 1953, according to a second web site. But 62 years is how it has been in use, not how long since the patent expired. Drug patents then lasted 17 years, so 1970 is the absolute last date for patent expiration.
Forty years ago (or "sometimes in the 1970s) came from here:
https://www.quora.com/When-does-the-patent-for-Daraprim-expire
That says the cost (per prescription, not per pill) would probably have to be about $500-600 for a generic manufacturer to be interested in manufacturing it, given that theer are only about 8,000 prescriptions written per year in the USA.Cost to get started would be about 75 to $150 million, and difficult to do, because it would hard to get ahold of samples, needed to prove it is identical. Turing, which distributes the drug, tightly controls who can get it. There might be better drugs, though, anyway.
He is no different than someone with cheap access to an endless supply of water selling bottled water for $750.00 a bottle in disaster areas of the country where the drinking water has become unsanitary. To excuse it because "it's the price the market will bear" is an indictment of capitalism.
If you just give it away, then a few will horde all of it and MORE people will be harmed. At least with "gouging", people have the opportunity to get the necessity.
Derek Lowe's posts>
This wold be like this:
http://blogs.sciencemag.org/pipeline/archives/2015/09/23/shkreli-turing-and-phrma
http://blogs.sciencemag.org/pipeline/archives/2015/09/21/what-to-do-about-turing-and-the-others
It's a blog (it says) about drug discovery and the pharma industry, editorially independent from the publishers of Science Translational Medicine.
He has such a punchable face, no doubt he will be someone's fine prison bitch. The government will see to that. As for the drug pricing, he is an opportunist taking advantage of government regulations. If the FDA were to allow importation of this drug from Brazil with the manufacturer posting some sort of bond in the US to assure QC of the medication then this wouldn't be a problem.
Re water famine indicts free-markets. Dont't think so. Local providers will stand up quickly when able, if allowed. Most every case I've looked at indicts government interference. "The Irish famine. sending food rather than dollars to starving Africans as a form of U.S. and other countries prok barrel support for their farmers rather than the indigenous farmers who are put out of business." "oh, so years ago you outlawed Walmart from coming into the area because it would be unfair competition with a local special-interest, so now you're thirsty? Tar and feathers for the government officials that were bought off by the "special interests" would be a good start." How many have died now when a taxi didn't arrive when Uber would have? Granted they would have died prior to Uber but who cares about sins of omission? No votes there. We "the people" as a government always sacrifice the least of us first (unless constrained by a contract enforced by the courts that says "You shall not). Makes me appreciate Stalin's attempt all the more. Kill all the dissenters and you can live a generation or three under a government that decides it can do more than "only government can do" list. e.g. Walmart and Costco response to hurricanes being so much faster than any government organized response. Governments should just pay them to keep a rolling reserve. And insure that local competition can exist if when there's ever a need. i.e. low taxes and little if any regulation.
"Express Scripts offers $1 alternative to $750 Daraprim pill"
http://www.cbsnews.com/news/express-scripts-will-offer-1-alternative-to-750-daraprim-pill/
He's a price-gouger, pure and simple. He is no different than someone with cheap access to an endless supply of water selling bottled water for $750.00 a bottle in disaster areas of the country where the drinking water has become unsanitary. To excuse it because "it's the price the market will bear" is an indictment of capitalism.
After all that's happened, the fact that people are still economically illiterate enough to write something this supremely stupid is an indictment of our educational system.
No Jason, the indictment is on your lack of ability to understand the cogent point he just made.
Price gouging!! Much complaint from users when it rains and Uber goes to high demand pricing. Want a ride? 2X. Pouring extra hard? 3X. And the whining begins. Price gouging!! Unfair!!
Solution. Go stand in the rain and flag a cab.
The pricing for the drug seems a bit on the high side but then that is often how pricing happens with scarcity and truly desperate demand. Need a heart transplant? No problem, we can give you one next September for $1,000. Oh, you want it tomorrow? $50,000.
Ditto airline pricing. And so it is that we business people who have to travel on short notice end up buying the $1,000 ticket and are seated next to a nice lady who paid $115.
And so it goes.
I think I'm still going with this being some SJW ploy that had this guy with some friends acquire the company and then jack the price to create outrage. It's not about this drug or this guy. It's about the other guys.
Thanks, Sammy, for the links to Lowe's articles. I was posting from a difficult mobile device and needed to be brief.
(I recommend Lowe and have been reading him about as long as Althouse. Start with "Sand won't save you now" for chemistry fun.)
"Price gouging!! Much complaint from users when it rains and Uber goes to high demand pricing. Want a ride? 2X. Pouring extra hard? 3X. And the whining begins. Price gouging!! Unfair!!
Solution. Go stand in the rain and flag a cab."
Actually, I do prefer to hail a yellow cab. Fuck Uber.
You are absolutely right, Jason. Not only mind numbingly stupid, but ignorant as well. If there was any curiosity, the stupidity and ignorance could be overcome, but these folks are butt-achingly incurious as well. And "these folks" includes folks like Hilary!(TM)
The very first question anyone should ask is "At $750/pill, is he making any money? Breaking even? Or operating at a loss?
When I first heard the story, and heard that it was low volume, my first thought was "Sounds high but it could be the right price level" When I read this morning that the volume was only 8,000 prescriptions a year, I was amazed at how low it was. I can understand how it would be hard to make money on any pharma product when volume is only 8,000 prescriptions per year. It has nothing to do with the cost of the active ingredient.
I say this as someone who has been working in manufacturing, about 75% pharma manufacturing, since 1976. As someone who is intimately familiar with the cost structure of pharmaceutical manufacturing in general if not with this product in particular. I've written a couple of books where I discuss this. You can buy through Ann's Amazon portal. (Nice stocking stuffer, Hint, Hint)
As several people have mentioned, the fixed costs for any pharma product, even an existing one like this, are enormous. Few people outside the industry have any idea how enormous they are. Most of these come from govt regulation. That is what I meant by govt collusion. The Pfizers, Lillys, J&Js, Glaxos et al love the regulation. It drives their competition out of business. They are large enough that they can diffuse the costs over trillions of products. And insurance pays anyway so its all good. Except for the consumer.
(Continued)
Continued
If we guess that each prescription is for 50 doses, that is a 40,000 tablets per year. Even a small, laboratory grade press runs 500-1000 tablets per minute so perhaps a couple hours of production. Production grade presses run 10,000-20,000 tablets per minute and many plants will have dozens of presses running 24/7
They have to pay for this monster regulatory support infrastructure all year long whether they are running a couple of hours or 8760.
the drug in question sounds like an "orphan drug", very low volume, specialty drug. A lot of them don't get made because what company wants the grief of people like Hilary Clinton, Cookie and Amanda when they charge what it costs? Easier to just not make it an let the people die. Wikipedia has an entry on orphan drugs if you want to know more.
So import it from India, Canada or wherever? Fine but Joe Blog Pharma in India has to meet all the same FDA regs that a US company does if they want to export here. That includes bringing in FDA inspectors from the US. India has a fine pharma industry but they do not comply with all the FDA requirements. They comply with India requirements which are similar, but not the same.
India, Brazil, many other countries around the world have huge problems with counterfeiting. Something like 50% of all drugs sold in India are counterfeit. You want to just let them in with no oversight?
One answer is pharmacy compounding. The ingredients are cheap. A pharmacy can probably make the tablets and make a profit at $1 a tablet or less. But there are some problems with this:
The manufacturing process will likely be different. Will that affect the efficacy of the tablet? Maybe, maybe not. Probably no testing will be done to find out. The manufacturing process will likely vary from pharmacy to pharmacy.
Regulation is by the state board of pharmacy, not the FDA. Deal with a reputable pharmacy and you may be OK. But how do you know who is reputable or even competent?
Where to they get the materials, active and inactive, from? How do they handle them? How to they guarantee no deterioration or contamination?
And the list goes on.
I am not saying that compounding pharmacies are a bad thing, they may be the way to go here. But they have a lot of their own issues.
So to everyone here who has complained that the guy is ripping people off, show me the money. Show me how much profit he is making by making this product. If any.
I do not know, myself. I have no access to his financials. He may be making huge profits. He may be running at a loss. Or somewhere in between.
I don't know. More importantly:
Neither does anyone else opining on this
John Henry
Perhaps it was the hatred that prompted the district attorney to examine Shkrelli's other business dealings for plausible misdeeds.
And they were going to find misdeeds, one way or another. I don't think you can actually run a public company without opening yourself up to a creative prosecutor.
Shhh, Amanda. Grown-ups are talking.
John Henry wins the thread.
"You left out the part about the government preventing people from getting their water elsewhere."
You can be sure the government is operating at the behest of the pharmaceutical firms in making it illegal to buy or import prescription medications from outside this country.
"If you just give it away, then a few will horde all of it and MORE people will be harmed. At least with "gouging", people have the opportunity to get the necessity."
If it's being given away, why would people horde it? They could just get more for free as needed.
"After all that's happened...."
Jason, what do you mean by "all that's happened?"
If it's being given away, why would people horde it? They could just get more for free as needed.
Because when things are given away for free, many people take more than they need, and supplies run out. Other people, anticipating this,take more than they need to guard against supplies running out, and the problem is compounded.
You can be sure the government is operating at the behest of the pharmaceutical firms in making it illegal to buy or import prescription medications from outside this country.
Damn those evil firms developing and producing life saving and health improving drugs! They should have to do so for free!
What you should be condemning is the fact that the United States subsidizes the development of these drugs for the rest of the world through the high costs we pay.
Jason, what do you mean by "all that's happened?"
Well, for starters, 50-70 million dead of starvation because of shortages and distribution problems because anti-capitalists thought government bureaucrats directed the abandonment of natural price signals because they thought they knew better. But that's just the beginning of the miserable track record of abject failure, misery and death on the part of socialists and price dictators.
If it's being given away, why would people horde it? They could just get more for free as needed.
Fucking idiot.
Scottie, beam me up. These left-tard idiots are hell-bent on destroying this planet, and they're too stupid to reach.
Post a Comment