Wednesday, September 23, 2015

The Villain and Daraprim

Laurie's Link on "a different evil corporation"...
MJ Heat Warming Story

Slate Martin Shkreli
CNBC Drug Story

Now this guy seems a bit extreme, however do you really want government breaucrats trying to decided how much you can charge when selling things?  What could be the good and bad consequences?
 

40 comments:

Laurie said...

do you really want government breaucrats trying to decided how much you can charge when selling things? yes, I want govt control on the price of medicine. I believe most other countries do this.

Laurie said...

I came across this while reading the Atlantic:

"As Rafi Mohammed, an economist who consults on pricing issues, writes in the Harvard Business Review:

"There’s no mystery why prescription drug prices are higher in the U.S.: virtually every country regulates prices and the U.S. doesn’t. In fact, Congress has explicitly prohibited Medicare from negotiating drug prices with pharmaceutical companies. (Close to 40 million people in the U.S. have this prescription drug benefit). Prices in Norway, the fourth wealthiest country in the world (U.S. is number 6), for instance, are amongst the lowest in Western Europe. The bottom line: most countries play hardball on drug prices, while the U.S. pays retail. As a result, consumers in the U.S. are stuck footing most of the bill for developing new drugs, even as consumers throughout the developed world reap the benefits."

John said...

Laurie,
Now you are a big fan of the US helping people in other countries by non-military means. So what eaxactly is your concern that drug companies can justify R&D based on the good profit margins they make in the USA. Our high healthcare cost is and has been helping people around the world for decades. If you cap the "reward", you cap the desire to take "risk".

"As a result, consumers in the U.S. are stuck footing most of the bill for developing new drugs, even as consumers throughout the developed world reap the benefits."

The drugs, medical devices and test equipment developed here migrates around the world and save millions.

Anonymous said...

"The drugs, medical devices and test equipment developed here migrates around the world and save millions."

So this type of welfare, that the citizens of the U.S. are forced to pay for, is okay?

Joel

Sean said...

And it subsidizes large foreign corporations, too. Three of the top 4 and six of the top 10 pharmaceutical companies in the world are not American companies.

Anonymous said...

It's been a bad week, or for that matter a bad decade for capitalism. That tends to explain why socialism is on the rise.

--Hiram

John said...

Joel,
If it motivates companies to keep coming up with new a better medications for all of us, I am thinking it is a win/win for all of us.

And remember that I am against welfare because it is arbitraily managed by the government and it encourages people to make poor decisions by reducing the consequences to those who make them.

In this case we are encouraging R&D in search of more profits. Capitalism at its finest. The price fixing states (non-capitalism) are the free riders in this case.

John said...

By the way, I think this hedge fund guy is just a slimy opportunist. Not like the serious companies who take huge risks and spend a fortune on R&D.

Laurie said...

A health economist explains the real reason American drugs are expensive

maybe drug prices are too high because profit margins are to high, there is too much r and d, and there is too little competition.

John said...

If that is what got out of that post, I think you should read it again.

By the way, that was a great "fair and unbiased" source. Thanks.

Laurie said...

maybe you should read it again, all three of my points are discussed in the article. btw what do you have against Craig Garthwaite, a health economist at Northwestern University’s Kellogg School of Business, he sounds pretty knowledgeable to me.

Laurie said...

I am curious, John, about how you would feel about becoming a billionaire by pricing lifesaving drugs so high that many people who need them cannot access them.


The True Cost of an Expensive Medication


My older son has moved back home and we have been using news items (VW, daraprim and now Sovaldi) to discuss ethics. My point has been just because it is legal doesn't make it right. To me it this price gouging on drugs seems to contradict Christian values. I wouldn't want to stand at the pearly gates explaing how I made my billions by overpricing medication.

John said...

Laurie,
I think I complimented your source above. What I found odd was that you pulled out only a couple of things that you agreed with out his whole excellent piece. I mean he seems very aligned with my views.

"I don’t love the fact that the United States is effectively subsidizing drug innovation worldwide. But I’d rather have that happen than have no one subsidizing development."

"I have research showing that when we passed Medicare’s drug benefit, there was an increase in clinical activity around drugs that treat the diseases of elderly people." "We definitely show the market responds in the way you think it would."

"We have to allow people to make profits to invest in technology that doesn’t exist today. They have to have some kind of rate of return. But buying an existing generic drug and raising the price, and taking advantage of the fact that people won’t enter that market, that’s not the same thing. We want to allow drug companies that develop new drugs to have a period of market exclusivity as a reward. But the effective situation with Daraprim is that due to market inefficiencies, they could be a monopoly producer for a good long time, and there’s no reason to think someone else will enter."

"If you think drug prices are too high and have too much market power, I don’t think the solution is granting more market power to another entity. If you have a bicycle and your tire is flat, you don’t flatten the other tire to make it work well. I don’t know why we think that if Medicare is our negotiator, they’ll think about these future innovations very far. They don’t know the correct level to set."

John said...

This reminds me of the book Atlas Shrugged when the Looters and Moochers came after Hank Rearden with the expectation that he should give them the formula for Rearden Steel because it was unfair that he had it and his competitors did not.

I mean we even have a government guy saying that the tax payers can not afford it.
"State Medicaid programs, meanwhile, feel their hands are tied. “The states can't afford it,” said Matt Salo."

I think your son should join us here occasionally... It would be interesting to hear his views on morality and ethics.

If a company spends 10's of millions of dollars, multiple years, and takes the risk that it may not work and the money/time may be lost... Should Liberals be able to demand that it be given away at bargain prices to help people who would not have had access to it if the company had not developed it in the first place?

If the Liberals got their way, what company in their right mind would invest that fortune and time? How would that help patients with other conditions that have not been resolved yet?

Since I likely own some Gilead through one of my stock mutual funds, my biggest holdings in the healthcare area are in this one. I sure expect those companies to make some money so that I get paid.

John said...

Your "I wouldn't want to stand at the pearly gates explaing how I made my billions by overpricing medication." comment is interesting and really simplistic.

I am guessing St Peter will want to know:
- how many people were helped by the profitable company that generated even more life saving drugs, and paid salaries to hard working employees.
- how many additional lives were saved due to that on going research new development and the charitable doses that were given out.
- how much of your income, time and efforts did you donate to charity.

Please remember that if Gilead had not developed the drug NO ONE would be receiving the treatment. And government can always shift some of those 6 trillion tax dollars this way if they think it is important.

Laurie said...

Is there any level of earnings or profits that you would consider excessive in health care field? I believe I read That drugs I the USA cost about $1000 per person I would prefer about 50 percent less and less inovation and less profits and greater access.

Laurie said...

Gilead could continue to make reasonable profits, develop new drugs, pay thir employees well and save the lives of thousands of more patients by reducing the price of Sovaldi by 25%.

Or maybe they should jack up the price more, as this is a life saving drug and those who can will pay any price. Also, it seems billions are not enough for their ceo and you need to further pad you IRA. So thousands more would die, but at least you could enjoy a more upscale retirement.

John said...

" I would prefer about 50 percent less and less innovation and less profits and greater access."

Which of these would you prefer not have been developed?
FDA Report
CenterWatch 2000

How would you decided?

Being that I am a huge beneficiary of the 1980's anti-anxiety / anti-depression medications, I am a big fan of innovation to help the many...

Laurie said...

What if your health insurance went up by another couple of thousand a year to support pharmaceutical research, would you be in favor ot this? As for me I 'd rather spend the money on a spring break vacation.

John said...

Laurie,
You seem to have no problem driving my taxes up another couple thousand of dollars per year...

Now answer my question, what drugs would you want to delay the introduction of?

Please remember that if it wasn't for "big pharma" you would not be even discussing who had access to these drugs... Because no one would. They would not have been discovered.

Laurie said...

Maybe you would be infavor of paying $10,000 more per year for insurance to fund even more medical research, who can put a price on life saving treatments, right. Why not even $20,000 more per family.

John said...

I am not the one proposing change. I think our society is already funding adequately and putting bounds on medical research with Medicaid, Medicare and Insurance policy rules.

You are the one who is proposing that these rules are not fair. And that people should be forced by the government to sell their efforts / product for less than they currently can.

Laurie said...

What if you had a rare, life threatening condition that could be treated effectively with a medication manufactured by only one company and the cost of your treatment was $1,000,000 not covered by your insurance, (previously this medication was available for $250,000) What would you think of our capitalism based health care system then?

I think socialized medicine makes much more sense. The govt could fund research and I bet most research scientists would do a good job working for about $150,000, we could pay them more if need be. We'd have a much more sensible, cost effective, and inclusive healthcare system. The losers would be the CEOs who would no longer be making their billions by over charging patients.

John said...

You have far more faith in governmental bureaucrats than I do.

Please remember that these are the folks who brought us our public school system where a large number of students make it to 18 years old without being academical competent.

I don't think putting our lives in their hands is a very good idea.

John said...

If your proposed system is better... Why is it the American /Capitalistic system that creates most of the ground breaking medications in the world? And not the research systems in those price fixing countries?

Laurie said...

USA spends from 30-50% more on healthcare than other countries, so it would make sense that we might make more medical advances. On the other hand we still rank 11 out of 11 overall in quality of our healthcare system compared to other countries, so perhaps our capitalist system is not that great after all.

Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally

Laurie said...

specifically we spend twice as much per capita on pharmaceuticals ($1000 compared to $500 OECD average)

OECD Health Statistics 2014
How does the United States compare?

John said...

I have no doubt that those systems are more equitable.

However being someone who can afford better and after talking to my peers from those countries, I would have no desire to have a system like those here in America.

Poor availability of equipment, long waits for procedures, limited max benefits, etc...

Sean said...

It's interesting that despite all these problems that other countries have, they manage to produce better heath results and spend less money doing so. And yet you revel in our system's clear inefficiency and waste!

John said...

Maybe I just don't like waiting in lines...

Sean said...

The length of times shown in this report is the time until final treatment occurs. You can easily find long treatment times in many specialties around here. Yet, despite those waits, Canada has better health outcomes across most metrics and they spend far less doing it than we do. But I guess it's "freedom" or something to die earlier and spend more on your way out the door.

Heck, you can't even stomach the ACA, which takes serious steps towards this: "What policies will discourage every American from acting irresponsibly and taking advantage of the efforts and charity of others?" by reducing the number of health care free-riders.

Laurie said...

It's Really Hard Not to Hate the Pharmaceutical Industry


"Another day, another drug. Today comes news of Nitropress, a generic blood pressure drug that was priced at $44 per vial way back in 2013. Then it was sold to Marathon Pharmaceuticals, which raised the price to $257. A few months ago it was sold yet again, this time to Valeant Pharmaceuticals, which raised the price to $806."

John said...

I am neutral on ACA, however I am happier if Liberals actually admit that for many it is a form of welfare like medicaid that is being paid for by people and companies who pay for non-subsidized policies, and the wealthy.

Remember when Laurie said only ~4 million were getting freebies from the tax payers. When it is closer to 100 million people.

My heartburn usually only rises when Liberals say that the successful are not paying their fair share... When they are actually paying their own governmental costs and those of multiple to hundreds of other citizens.

Or when they say that these programs are not welfare or a gift to the less fortunate / less motivated.

Laurie said...

I was using this definition of welfare:

"In the United States, depending on the context, the term “welfare” can be used to refer to means-tested cash benefits, especially the Aid to Families with Dependent Children (AFDC) program and its successor, the Temporary Assistance for Needy Families Block Grant"

and my number of 4,000,000 is accurate for the current number of people in the TANF program. Did I mention this number is way down from previous years?

also, what do you think of raisng the price of a generic blood pressure medication 1700% ? this increase is so extreme I am not sure of the math to calculate percent increase. I am sure with these types of pricing decisions we can all look forward to more increases in the cost of our health insurance (and many people will blame Obamacare rather than pharmapeutical companies.) The the higher insurance costs may even increase more than the value of your investments. And don't even bother with any more of your corporate apologist drivil

John said...

"means-tested cash benefits" - that applies to tons of government handouts, since most phase out some income level.

Please remember my comment above...

"By the way, I think this hedge fund guy is just a slimy opportunist. Not like the serious companies who take huge risks and spend a fortune on R&D."

This could apply to the nitropress medication, however I would need to know more before I was qualified to make a call.

Sean said...

"I am neutral on ACA, however I am happier if Liberals actually admit that for many it is a form of welfare like medicaid that is being paid for by people and companies who pay for non-subsidized policies, and the wealthy."

I don't think folks have really denied that, to be honest with you.

Laurie said...

I believe Tanf is the only cash benefit. Do you have any other examples of cash benefits?

John said...

What do you think food stamps are? Stamps?

Or tax credits that often result in a sizable tax refund check?

Or housing / heating assistance?

Sean said...

Food stamps and housing/heating assistance are not cash. You can't use them to buy other things.

It's fascinating, though, that tax credits to poor people are "welfare", but tax credits for wealthy people aren't.

John said...

"Are not cash"... You must be kidding... They are paid out by the government and free up the recipient's other cash so it can be used as they wish.

I would also argue that medicaid is also welfare though it does not quite fit Laurie's definition. I mean it is paid out by the government, that free health insurance saves the recipient a lot of cash and it is means tested.

Please tell me about the tax credits that are available to rich people? I know of none. All of our tax credits phase out at some income level.

As far as I know, all rich people get are deductions that require them to spend money or give money away to get some reduction in their tax bill. And those same deductions are available to all of us.