Ehh, money in fungible. Most pharma research doesn't pay off, so they need to really rake in the cash on the bets that do. This is a strategy to get one drug to pay for research into others. I'm familiar with the customer experience they describe. There is a big principal/agent problem. My son gets a regular injectable that has a very high sticker price. So the drug company has set up a company that reaches out to customers and helps guide them through the process with insurance companies to make sure coverage is granted, and extended each year. They'll pick up the tab on copays. There is no disincentive for the patient to get the drug. They remove the paperwork and copay barriers. So if the doctor prescribes it and the patient wants it, only the insurance company is left to say no. They can push back a bit on price, but they risk angering their customers. Easier to raise premiums.
That's one of his excuses. But he also said he needed to raise the price to not lose money on the transaction itself - meaning that all the new profit is going just to pay for the purchase price, at least for the foreseeable future. Basically, they created a bunch of new expenses out of thin air, and now have to raise their prices to cover those expenses. With the low volume of sales (10,000 pills per year), it's doubtful that much, if any, of the new revenues would remain for research.
At $750 per pill and 10,000/year it would have an ROI of over 7 years. I'm not sure this guy is CEO material.
how can you sell only 10k pills per year? I read yesterday that it's not FDA approved in the usa for veterinary use but still it is widely used. Are we sure the numbers are right?
If we can buy imported cars, TVs, computers, cell phones etc for a cheaper price... Why not medication?
The process you describe is actually a big problem. That process was instituted after insurance companies started offering cheaper copays for generics versus name brand drugs. When insurance companies started doing that, generic drug use skyrocketed and they were starting to capture the entire market. This was good for everyone. Insurance companies were paying less for drugs and consumers were paying smaller copays. The drug companies found a smart way around this problem. They started heavily advertising the name brand drugs and then offering coupons that covered the copay in order to make the brand name drug actually cheaper to the consumer. That's great for consumers but terrible for the overall health care market. Insurance companies are now stuck paying higher prices for name brand drugs since consumers are bombarded with advertisements and coupons that push name brand drugs so they in turn raise insurance prices and overall health care spending by insurance companies became artificially high. Among other reforms, drug advertising needs to be banned and drug companies should be prohibited from subsidizing copays. It completely undercuts the ability of insurance companies to fight for lower pharma prices.
Not sure if you have been listening to what I have said. Nobody that needs it will not be able to get it. If they don't get it, it's because they didn't try. They aren't killing anybody. Not sure how your response is related to what you quoted from me. Arguing profitable before or after? Of course. It's just business. But they know that they cannot have a patient not be able to have access. Yes. More than once. Rather not go more in depth in this though. I do not see profit margin question mentioned in your comment, so I do not know why I am answering a question you didn't ask. I was 8 hours in an econometrics pset last night. Was there other context? Worked in the industry in a seller of biotech equipment, know people that work there, may work there, etc. They could. But Turing would still price them out of the market. It's been a month; the production facility has also already been changed to another drug. Turing also got outside money before buying this product anyways. It's not only people from Turing, and Turing isn't the only company to do this, which would not be a one-time hype machine. I am very well aware of his background and personality Maybe it does implode? Lot of negative press is a hard hit for a small business company. Scares away investors, which are critical for small pharmas. Similar properties of many hedge fund backgrounds. Values of the business. At Bridgewater, people will directly confront (and trash) your ideas; lot of alpha dog personalities there. Started the company. Generally, those people are not insured. Also, competition among insurance companies. The premuim will not go up enough, since the consumer base isn't much, that the potential loss of a customer (and reputation) by dropping the drug is not worth the price increase. This is not a drug to take for life, but the potential ramifications are beyond just a singular customer. I believe that is the logic. This method has, very often, worked before. In another analogy, this is like taxing the 1%. Many biotech and pharma companies don't get ROI for a long time. One, I will not name, is 400 million in the red, and is still getting investments. This is not uncommon. Quick response again.
And that's assuming no expenses involved in actually operating the factory, etc. I still don't get how, after being accused of bilking his previous company to pay off previous hedge fund investors whose money he lost, a board of directors thought this guy should be a CEO of yet another company.
oh I meant to say that there are other therapy protocols taht don't need Daraprim. Maybe I understood wrong what you were saying.
It's probably on me, to be honest. I am responding to too many people and getting confused, in a week that I am too busy and can't focus on my response as much.
This illustrates why we need improved government regulation to prevent the exploitation of the American consumer by American drug companies, as well as opening our borders to medications produced overseas and at a drastically reduced price, so Americans can pay a reasonable amount for the meds they need. People who say, to paraphrase, "Those who need the drug will get it one way or another, whether they can afford these absurd prices or not" are ignoring what I consider a salient fact. We still pay. Insurance companies raise their rates to consumers in order to cover the expense. If you have government insurance, like from the State of Texas, for example, they will find a way to cover the cost through higher co-pays for the majority who don't need this particular medication. Higher co-pays not simply because of this drug, but because of the practice the ridiculous price increase discussed here represents. In my humble opinion. We all pay for price gouging by drug companies. Yes, they need to recoup research costs. What they shouldn't be doing is gouging the public in order to do it.
the 'they'll get the drug anyways' argument just doesn't resonate to me. It's a bit like saying nobody's refused care at Emergency so health care costs or insurance are not an issue. If you're in dire straights, the drug will be available. If you're not quite there yet, the cost may put you there. This business model seems very similar to a patent troll. (ironically, without the patent). The biotech startups I'm familiar with try to develop product through research contracts and funding, and then hope to get bought out by big pharma. I'm not sure this is biotech at all. More of a hedge fund mentality of identifying an underoptimized revenue stream and taking advantage.
The drug has been around for 62 years. The company he started does not manufacture the drug. Someone else handles that. What research and development costs could there be for a product that has been around for 62 years?
I just read a bunch of articles on this guy. It looks like the first biotech firm he started, Retrophin, was started as a criminal enterprise to cover up the criminality of his hedge fund. Somehow that company is successful, though. It makes me wonder what this guy could have done if he wasn't a criminal constantly trying to skirt the system. He also allegedly was fundraising for his current company, Turing Pharma, while CEO of Retrophin. Then, after being fired from Retrophin and through a third party, purchased one of Retrophin's drugs while trying to pilfer their employees. This guy seems like a classic criminal sociopath. Hopefully he'll be rotting in prison once the investigation is completed (yes, he is under federal investigation for this stuff before the 5000% price gouging news even came out). To make it a little more bizarre, he also owns a League of Legends and a DOTA 2 eSports team and was financing hardcore punk music. This story makes me miss the endangered species killing dentist. I don't even think that dentist could get behind price gouging AIDS and malaria patients. It's incredible what people get away with. In most stories, I say that I need more time and facts to make a judgment. I can honestly say now that this guy is guilty as charged. Bury him.
there are more cases of this thing. But it didn't cause public outrage. For example colchecine that is a trully ancient drug. The difference is that they just doubled it they didn't had a 5k % increase. It's all due to the monopoly.
When you put it that way, how different is that from a private equity firm overleveraging to take over an asset (company), then saddling the "debt, expenses and overhead" onto the bought out company in order to justify the life destroying changes that inevitably follows? Not being snarky here. Some private equity firms do trim the fat and change companies for the better. Their general reputation says otherwise.
There is really no difference except that this guy is taking that approach into medicine (I am sure he's not the only, nor the first one to do it...he's just the poster boy now). This type of vulture capitalism is disgusting no matter what type of business it's happening in, but it's especially disgusting to buy a drug on the essential drugs list and then price gouge the hell out of it. These people have no shame.
This is the heart of the matter and will not be addressed any time soon. Pharma is connected/has been connected as seen by the failure of Clintoncare and the deaf ears of negotiating drug prices or loosening import restrictions. A previous post by txtony asked why you couldn't just drive to Canada. It's illegal and on the face of the argument that "safety standards" might not be met sounds reasonable even if the spirit of the argument has been horribly corrupted. One thing to keep an eye on is TTIP negotiations regarding pharma. http://www.in-pharmatechnologist.co...ill-force-FDA-EMA-to-sync-regs-says-biopharma http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153010.4.7 Pharmaceuticals.pdf http://www.pharmaphorum.com/articles/ttip-–-bringing-benefits-to-patients-or-big-pharma Maybe the silver lining is to align regulatory standards because at the very least it undermines the argument against importing the exact same ****ing drug and bring some semblance of a market equilibrium.
It's really not - this is the world that the CEO comes from. He's a hedge fund guy, not someone with any sort of medical background or knowledge.
