Turing Pharma 5000% price hike, why regulation doen't cut it

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In case you are not aware there is a recent story of Martin Shkreli, CEO of New York City-based Turing Pharmaceuticals who bought the rights to an existing drug Daraprim, which is a 62 year old drug for fighting toxoplasmosis. He increased the price from $13 to $750 overnight.

This is a drug that already works well. He justifies a massive price hike, saying he will put money into research of toxoplasmosis. However there is no evidence this will be the case, or he even has the capacity to do it. Besides the drug already works really well. This drug is needed for people with compromised immune system, such as AIDs patents.

People talk of "Big" pharma. The reality is big or small, you will still get behaviour like this. I never bought the research argument, becuase often the initial research is done by individuals, universities, etc. These companies are no better or worse at finding solutions than anyone else. The vast majority of what they so is product development, rather than actual research. Research is still underfunded. They aren't investing enough in those individual that are doing the ground work. They are only interested, when they have a product they can evergreen.

Retrospective regulation doesn't address the issue. As it will only be possible to enforce the cases that draw attention to themselves. It wouldn't be possible to enforce all the cases, and also as I will explain later there is a flaw in handing over this power to a government body.

The real issue is the patent system itself. Study the history of the patent system. It is a story of a collusion and is basically a glorified royal degree of monopoly.

People are likely to see things that don't benefit them as excessive protectionism, but at the same time things that do as 'rights' or 'property'. This is nothing of the sort. "Intellectual Property" is a complete misnomer and always have been. In fact early patents were never called that, nobody had any pretense about what it was.

Think about it for a second: You are paying government(s) for the privilege of not having to compete. It is a protection racket and an excellent example of collusion. Mussolini championed collusion like this, yet he never achieved in his lifetime what we now take for granted.

The problem with retrospective regulation, is who is to say what is a good or a bad company? You might say this case is pretty clear cut and sure it is extreme, but that still doesn't solve the problem. These regulations tend to focus on certain activity at the exclusion of other, which is arguably just as bad.

It is moronic to have a government that is on the one hand colluding with companies through protectionism like patents, then trying a to rein in a few. Anti-trust has been an abject failure, and it only applies to a special class of companies as it is. I remember when it was all focused on Microsoft. You might say that was justified, but it ignored many other companies that had spun a better images. Treat some companies as boogie men, then you are naturally favouring others. Anti-trust basically works on that basis, it is not a neutral arbitrator.

Why not have the conditions of the market, so they can't operate in this way in the first place? It seem more logical than building companies up through collusion, then trying to rein in a few unruly ones.

My opinion is the patent system should be limited:

1. It should be linked to individual innovator not companies (I criticise incorporation and company law too but that is another discussion).
2. It should last a limited time such as 5 years.
3. It should be non-transferable and non-renewable.
4. The criteria needs to be more limited.

If there vulnerable first steps, then the patent system should only be limited to this. Even if a product take 20 years to develop, I don't see why they should have more than 5 years of protectionism.

There is absolutely no reason why someone else couldn't use an idea and build on it. The Patent system is anti-invitation. The more competition in developing solutions the better. Also more diverse markets insulate the public better. Monopolies create vulnerability, because if they fail the consequences are far greater for ordinary people. Also becuase of all of these special statuses an lack of liability they can fail, without consequence to themselves, though shareholder and public can be stung.

Sorry if this is not much of a question, but is intended to be a discussion so I'm eager to hear your thoughts.

Public outrage solved the problem.

As an evil hardhearted conservative, I'm against expanding government regulation since it only opens the door wider for government abuse and general bureaucratic incompetence.

Having said that, I see medical price regulation as the lesser evil to where we are now in terms of affordable healthcare. Each drug, procedure, diagnostics, and anything else related to healthcare that can be itemized should have a price cap. Any rate increase would have to be justified with verifiable details. I have nothing against anyone getting rich but $750 for a $13 bottle of pills is total BS and this is just the tip of the iceberg.

This seems to totally escape people that champion socialized medicine as a way to relieve the burden on the individual. Geuss what; it's still going to be criminally expensive. Control the prices (f**k I hate saying that ) and more employers can afford to offer coverage and even individuals who don't get healthcare as a benefit can afford it.

The issue here isn't the patents. The chemical is out of patent. However, because it is so niche (there are only a few thousand cases in the US every year), there is little profit to be made from a generic drug, so nobody has bothered to make one.

There are other cases where patents can be an issue. I do think a 20-year patent (the present situation) is appropriate and creates enough incentive to fund R&D. However, there are weird quirks:

- It encourages profiteering in those 20 years, including encouraging doctors to use the drug "off-label" for conditions it hasn't been shown to treat effectively.
- Companies can make "Me Too" drugs by slightly changing the chemical formula. These are usually slightly less effective, but it means you get another 20 years of patent. The generic drug doesn't generate profits, so isn't marketed, whilst the ineffective Me Too is sold for ridiculous profits.
- Worse than that, there are "Me Again" drugs. Chemicals can have a characteristic called "chirality". You have two compounds with the same formula, but the groups around a carbon atom are attached slightly differently to make the drug "left handed" or "right handed". Usually, you'll naturally create an even mix of left and right handed chemicals. If you discover a drug works, you can try using only the left handed version, or only the right handed version, and get another 20 year patent!
- Lobbying groups don't understand all this. They think that expensive drugs must be good and generic drugs must be bad, so they actively lobby to be treated with expensive drugs that will not do them as much good as their current drugs.

The best solution is probably to use computer systems to encourage generic drugs ahead of Me Too and Me Again drugs. If they stop making money from them, drugs companies will stop making them.

The intervention in the market that you are proposing is waaaaaaay more socialist than Medicaid for all.

In the case of this specific drug, the company are part of a government scheme that offers incentives to companies who provide the drugs cheaply to people on Medicare and Medicaid, or who can demonstrate a financial need. The ones paying the sky-high prices will be those who can afford the drug, although they're still being exploitative.

But that's the advantage of a single payer - you can negotiate better rates when you buy in bulk. Dozens of insurance companies can't offer the same demand that a single government can. Rather than expensive regulation of the prices of thousands of products, use the market to keep prices low.

Some would argue that by holding down drug costs, it would hurt pharmaceutical R&D. I don't believe that it actually would. As long as there is competition, there will be R&D. It's the cost of doing business and is tax deductable. As a fellow evil conservative, I agree with you that price regulation is all that needed to be done. My mother's out of pocket costs for drugs went from $200 to over $600 a month under Obamacare. " You get to keep your health care plan and your doctor". Bulls**t.

Single payer health care is a friggin' disaster. My wife went through the old system ( MediCal ) and it was pretty good, until she got into the UCLA liver transplant program. She met all the criteria for being on the top of the list, but was consistently put on the bottom because if your not a minority, a celebrity, or able to make a donation to them, you don't get a liver. Such is 'Socialized Medicine'.

If that's what it takes....

No one should be expected to pay sky high prices. The only discount should be the discount typically given for buying in bulk which while cheaper is not disproportionate.

If that is the case stockpile from India, and cut this guy out.

Drugs are expensive to make in inflated economies.

The patent system has many problems.

The R&D thing is a blanket excuse to f**k people that only the gullible will believe. Under the Raptor Plan the cost of each medication and service over a certain dollar value would have to be broken down into individual and verifiable elements including R&D. There would be some headspace factored in to allow for nominal price variances due to fluctuations in the cost of the various elements but that's all.

I've yet to talk to anyone that works for a living that has had anything positive to say about Obamacare.

This is sort of the system we have. We pay max 8.20GBP for each prescription. That is not to say the pharmacy pays less than that the remain cost is shared. However the wholesale cost is negotiated lower on some drug than for private prescription.

However rarely you cannot get a drug this way, then you have to pay for it at market value.

The problem with what you are are proposing, it is also susceptible to non-cooperation. Healthcare is one of those ares where you end up up with dysfunctional Quangos, whether you like it or not.

Some markets simply don't work purely on the basis of supply and demand. You are conservative am I'm trade liberal, I think we can agree on this. No matter the demand, no one system work perfectly. In this case is little incentive to cater to certain conditions.

My sister is a account exec and broker in the 4th largest insurance brokerage and reinsurance company in the world. There is no such thing as "comprehensive" cover, you can pay a s**t load over years and end up with nothing.

This is one of the reasons why countries have heath services. Your water supply and postal service and other municipal services are nationalised, and you take it for granted. We are quite rare in that is not the case (at least in the first two). Yet, are they really competitive? They still have some connection with government, they also price fix an often there is not enough of them.

Where you are dealing with industries where they bid for government contracts, it is always limited the degree to which there is Independence. There is issue of these companies handling public resources and conversely intervention issues. Neither public or private health completely replace each other. It is just that both fall short in different areas.

One thing that is true is health is important for economic growth. How that is achieved is an ongoing problem.

I'm not shooting down your idea completely but it is difficult to predict the implications and side effects of a theoretical plan such as this.

Also this is after all a government agency. Even now people critisise the partial nature which the FDA and similar operate. It is only as good as the people at the helm and enforcing this.

I do agree that companies do BS about how money is spent.

Last edited by 0_equals_true on 27 Sep 2015, 12:20 pm, edited 1 time in total.

Where do I sign on for the Raptor Plan? Sounds fair, so it will never happen. Oh, for a perfect world!

I don't think that European social democrats would even like Obamacare, it would be viewed as sticking plaster.

One of the first national healthcare initiative was the Austrian health system, the one that Hans Asperger work within.

The report that eventually lead the NHS was written not by a socialist, but a classical liberal.

If we were going to go to true nationalised healthcare in the US it should have been done sometime between the 30's under FDR or at any time later until it became too indu$triali$ed. At this stage with all the corporate barbed hooks sunk deep into government I don't think we could do a goddamn thing about it at this stage. Remember this is coming from a greedy capitalist.

My "Raptor Plan" is obviously more of a pipedream than anything but I still think it's has a better foundation than trying to do what we're doing now by figuratively putting little bandaids on the problem here and there in an ineffective attempt to fix what's too broken while f*****g as many people (or more) as it helps.

It's basically a s**t sandwich that we have to eat and feeble minded do-gooder attempts to fix it is like trying to push water uphill.

Bottom line is that a free market / unregulated Capitalism is not good for *all* consumers. A few other recent examples are snake bite antivenin, IV bags of sterile saline and estradiol valerate; all are out of patent and regularly cycle on the FDA's shortage list. The manufacturers simply claim production issues but it turns out that with a limited number of factories they'd rather keep them at capacity making high profit products instead. So the best advice to consumers is, don't get bit by a venomous snake or need an IV next year.