Without more information, I think the indignant tone and format of this article are unwarranted. Before we learn anything, we hear about the human toll: innocent babies will die, parents are distraught, and doctors are furious. But we're provided with no clear information on the reason for the price increase.
"When Mallinckrodt acquired Questcor in 2014, Synacthen Depot was one of the products in the portfolio. It was losing money then and still is. Moreover, in the spring of 2014, Mallinckrodt was told by the existing supplier of the product that they would cease production in early 2016," a Mallinckrodt spokesman said in an email to CBC News.
So the company faced an unexpected reduction in supply, and the drug might have been unprofitable at the previous price. One can object to the fact that the means of pharmaceutical production are privately owned, but given that these are not currently non-profit institutions, the outrage seems misplaced. There's nothing "absurd" about it.
Edit:
I'd like to address some of the commenters, who seem to have misinterpreted my comment as a defense of this company, or the pharmaceutical industry in general.
This comment is an objection to the style of journalism in this article: light on information, heavy on emotion. I've said nothing in defense of the corporation.
Some have suggested that these corporations should not increase prices in order to uphold some set of moral principles. I take it for granted that corporations are only answerable to power, and any limitations you might wish to impose upon them must either take the form of collective action (boycotts/protests) or regulation. Perhaps motivating either of these was the intent of the article, but if so the author went about expressing this wish in a way that I find objectionable, by appealing to emotion rather than reason and disguising an ideological belief as factual reporting.
> One can object to the fact that the means of pharmaceutical production are privately owned, but given that these are not currently non-profit institutions, the outrage seems misplaced.
The outrage with the outcomes is the only way a society to addressing the question of the appropriateness of the structures which produce the outcomes. That it is a natural outcome of the existing structure doesn't mean that it isn't absurd, though it might mean that if it is absurd, it is only because the structure of which it is a natural consequence is also absurd.
There exists a moral line, somewhere. In this case, parents of children with a rare, dangerous condition and the doctors that treat them find themselves on one side.
If the price increase had been negotiated, or given fair warning, or was tied to any documentation of the cost of production, it would be much more tolerable - or at least understandable.
Instead, this follows a recent trend of exploiting sick people for profit through mind-boggling price increases for critical medications after sometimes decades of very low prices. There is most certainly not a 2000% increase in the cost of production - if there were, there would likely be a lot more transparency.
> Without more information, I think the indignant tone and format of this article are unwarranted.
Agreed. For me, that "more information" includes things like: whether or not the drug is viable at its former price, the likelihood of this price driving other entrants into the market to find new solutions to address this problem, the ability of other manufacturers to develop substitutes, the amount of the profits that will be returned into development of other drugs that will save other lives, the baseline cost per life saved across the pharmaceutical industry, et. al.
High prices attract attention to existing social problems and are sometimes useful. Other times they're opportunistic and exploitative. It's not trivial to isolate the two.
Yes, but the fact that Martin Shkreli wanted to buy the rights for this drug makes me think there is somewhere a list of potential drugs that can be exploited in this way, and multiple companies are bidding for them.
I've posted it as a top level, but -- questcor controls the market for this drug after an 2012 purchase[0]. Here's your "more information". I wouldn't be surprised if Martin Shkreli got the idea for buying and hiking the DataPrim price after reading[0]. Expect a lot more of these things to happen.
The claim of losing money is almost certainly a lie. The marginal cost of a drug like this is usually almost nothing. The manufacturing costs tend to be small, and something like this doesn't need a sales force.
Meanwhile, Questcor and Mallinkodt were/are the poster children for abrupt and unwarranted drug price hikes by orders of magnitude. They are bad actors in an industry where scheming - both legal and otherwise - is so common that no one thinks twice.
I don't know much about pharmaceutical policy, but I have an idea. I would like to have it torn to shreds if it means we can have an idea of a more equitable process of creating medicine.
What if, in a single payer model, a resesrching entity that creates a new treatment which is in turn approved by the government, automatically forfeits any rights to the drug, but is guaranteed royalties for 20 years or so? Manufacturers don't have any limits on what they may or may not create, but there is a minimum price at which the government will pay for it, similar to the "cost+profit" model seen in the defense industry. Likewise, the obscure cheap drugs that get abandoned then have the rights purchased by sociopathic hedge fund managers would instead be manufactured by the state and sold at cost.
This is pure capitalism in action, and an important datum about what happens in free markets. [see edit below]
Questcor is cornering the market - this has nothing to do with research or availability. In 2012, they acquired the manufacturing of the pig-pituary-gland version of this drug, called "HP Acthar Gel"[0], and hiked the price from $50 to $28,000 per vial. In June 2014, they acquired the synthetic version called "Synacthen Depot" and modestly hiked it by just 2000%. The generic term naming both is ACTH, which is cleverly (?) disguised inside both names.
This is greed, plain and simple - now that Questcor owns the market, they can name any price they want, or the infantile spasm kids suffer greatly (die, or suffer developmental problems of all sorts including retardation). There are other diseases treated with ACTH, and dropping treatment due to cost has effects almost as severe.
Show me the parent who would let their baby die or become retarded because the price was hiked. That's an example of what any completely free market will converge to.
edit: I stand corrected in my use of "pure capitalism" - government regulation makes it very much not pure capitalism. But the monopolizing of production that we see here is a real-world result of capitalism (pure or impure) - the assumption that "if there's money to be made, some other entity will rise to the challenge" is not supported by evidence in small markets (such as ACTH). If it weren't, there would be no need for antitrust laws.
This isn't pure capitalism. This is a result of what Mises called "license monopoly". See "The Monopolized Commodity" under https://mises.org/library/monopoly-prices for more discussion of this.
"Under monopoly, a greater part of the specific factors of production concerned will remain unused. The common feature of all instances of monopoly prices is that part of the supply, which under competitive conditions would have been offered on the market, is withheld from the market. The most spectacular and objectionable instance of this withholding is the purposeful destruction of the commodities concerned. It happened mostly with consumers’ goods (e.g., coffee) but sometimes also with factors of production."
There are other sources of this drug, notably foreign production, but they don't have the proper licensing. Thus you get a license monopoly. There are a lot of drugs developed overseas that are effective but they are unknown in the U.S market because they are not approved by the proper license monopoly granter. Under pure capitalism, these products would be allowed on the market and independent rating agencies would ensure their quality.
So why not order the drug from China or India? Is the drug expensive to manufacture? Or is it that the Canadian government will only order the drug from select countries? I wish the article dug a little deeper.
A coworker who worked as a doctor in Afghanistan and Myanmar for about a year told me that a third of the medications they had in the hospital, and two thirds of the medications you could purchase in pharmacies contained no active ingredient. People kept dying on him because an antibiotic would randomly do nothing, or lysis medication turned out to consist of colored NaCl. He said that most of those medications were delivered from China and India because of the low prices in those countries. This is anecdata, obviously, but I'd be very careful purchasing drugs from countries with low oversight. Fake drugs are an enormously profitable market.
I also like this quote from a New York Times article:
“If I have to follow U.S. standards in inspecting facilities supplying to the Indian market,” G. N. Singh, India’s top drug regulator, said in a recent interview with an Indian newspaper, “we will have to shut almost all of those.”
The unease culminated Tuesday when a top executive at Ranbaxy — which has repeatedly been caught lying to the F.D.A. and found to have conditions such as flies “too numerous to count” in critical plant areas — pleaded with Dr. Hamburg at a private meeting with other drug executives to allow his products into the United States so that the company could more easily pay for fixes. She politely declined.
There may be requirements to purchase the drug from manufacturers that comply with government regulated quality controls.
Not that someone who really needs the drug couldn't seek out an online source to get it cheaply from overseas, but doctors may not be able to legally prescribe it from those places.
I don't have any knowledge on the subject though, just speculating. At least in the US buying directly from overseas pharmacies seems to be more or less illegal.
What's the answer here? Should the government pay for manufacturing of generic drugs that are non-profitable but "essential"? Let the tax payers eat the cost of such drugs? There's more than a few like that. I believe snake venom antidotes are often on such lists.
(note: I did specify generic drugs. Not drugs still under patent exclusivity windows. Which is a valid but separate discussion.)
Not to excuse the hike, but lets call it what it is - a 20 times increase.
Any use of percentages over double-digits is asking for confusion. And using a four-digit percentage is intentionally misrepresenting the scale of the increase.
>The price was so high that Alberta delisted it in July,
and government chickens out and fails to protect its citizens. The government has the power to treat it for example as public utility and negotiate the price based on that premise.
Hopefully more incidents like this will prompt people to question whether granting patents are actually useful to society or not.
Patents are after all an artificial (and supposedly temporary) monopoly enforced by society on behalf of a private entity, because society deems the value of this protection will create something beneficial to society as large.
Using patents to bump prices of existing, already profitable medicines hardly seems what patents were made for.
How would you propose we incentivize drug companies to spend $1B and 10 years in development/time costs (in the oncology space, for instance) if there is no IP to protect that investment?
Drug development is hard, expensive, and littered with failure. There isn't a simple approach to this problem.
[+] [-] rtl49|10 years ago|reply
"When Mallinckrodt acquired Questcor in 2014, Synacthen Depot was one of the products in the portfolio. It was losing money then and still is. Moreover, in the spring of 2014, Mallinckrodt was told by the existing supplier of the product that they would cease production in early 2016," a Mallinckrodt spokesman said in an email to CBC News.
So the company faced an unexpected reduction in supply, and the drug might have been unprofitable at the previous price. One can object to the fact that the means of pharmaceutical production are privately owned, but given that these are not currently non-profit institutions, the outrage seems misplaced. There's nothing "absurd" about it.
Edit:
I'd like to address some of the commenters, who seem to have misinterpreted my comment as a defense of this company, or the pharmaceutical industry in general.
This comment is an objection to the style of journalism in this article: light on information, heavy on emotion. I've said nothing in defense of the corporation.
Some have suggested that these corporations should not increase prices in order to uphold some set of moral principles. I take it for granted that corporations are only answerable to power, and any limitations you might wish to impose upon them must either take the form of collective action (boycotts/protests) or regulation. Perhaps motivating either of these was the intent of the article, but if so the author went about expressing this wish in a way that I find objectionable, by appealing to emotion rather than reason and disguising an ideological belief as factual reporting.
[+] [-] dragonwriter|10 years ago|reply
The outrage with the outcomes is the only way a society to addressing the question of the appropriateness of the structures which produce the outcomes. That it is a natural outcome of the existing structure doesn't mean that it isn't absurd, though it might mean that if it is absurd, it is only because the structure of which it is a natural consequence is also absurd.
[+] [-] themartorana|10 years ago|reply
If the price increase had been negotiated, or given fair warning, or was tied to any documentation of the cost of production, it would be much more tolerable - or at least understandable.
Instead, this follows a recent trend of exploiting sick people for profit through mind-boggling price increases for critical medications after sometimes decades of very low prices. There is most certainly not a 2000% increase in the cost of production - if there were, there would likely be a lot more transparency.
[+] [-] brownbat|10 years ago|reply
Agreed. For me, that "more information" includes things like: whether or not the drug is viable at its former price, the likelihood of this price driving other entrants into the market to find new solutions to address this problem, the ability of other manufacturers to develop substitutes, the amount of the profits that will be returned into development of other drugs that will save other lives, the baseline cost per life saved across the pharmaceutical industry, et. al.
High prices attract attention to existing social problems and are sometimes useful. Other times they're opportunistic and exploitative. It's not trivial to isolate the two.
[+] [-] ubersync|10 years ago|reply
[+] [-] beagle3|10 years ago|reply
[0] http://www.nytimes.com/2012/12/30/business/questcor-finds-pr...
[+] [-] bedhead|10 years ago|reply
Meanwhile, Questcor and Mallinkodt were/are the poster children for abrupt and unwarranted drug price hikes by orders of magnitude. They are bad actors in an industry where scheming - both legal and otherwise - is so common that no one thinks twice.
[+] [-] rm_-rf_slash|10 years ago|reply
What if, in a single payer model, a resesrching entity that creates a new treatment which is in turn approved by the government, automatically forfeits any rights to the drug, but is guaranteed royalties for 20 years or so? Manufacturers don't have any limits on what they may or may not create, but there is a minimum price at which the government will pay for it, similar to the "cost+profit" model seen in the defense industry. Likewise, the obscure cheap drugs that get abandoned then have the rights purchased by sociopathic hedge fund managers would instead be manufactured by the state and sold at cost.
Is that so crazy?
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] whistlecrackers|10 years ago|reply
Naturally regulated markets satisfy customer demands at the lowest cost when compared to the results any other system.
[+] [-] beagle3|10 years ago|reply
Questcor is cornering the market - this has nothing to do with research or availability. In 2012, they acquired the manufacturing of the pig-pituary-gland version of this drug, called "HP Acthar Gel"[0], and hiked the price from $50 to $28,000 per vial. In June 2014, they acquired the synthetic version called "Synacthen Depot" and modestly hiked it by just 2000%. The generic term naming both is ACTH, which is cleverly (?) disguised inside both names.
This is greed, plain and simple - now that Questcor owns the market, they can name any price they want, or the infantile spasm kids suffer greatly (die, or suffer developmental problems of all sorts including retardation). There are other diseases treated with ACTH, and dropping treatment due to cost has effects almost as severe.
Show me the parent who would let their baby die or become retarded because the price was hiked. That's an example of what any completely free market will converge to.
[0] http://www.nytimes.com/2012/12/30/business/questcor-finds-pr...
edit: I stand corrected in my use of "pure capitalism" - government regulation makes it very much not pure capitalism. But the monopolizing of production that we see here is a real-world result of capitalism (pure or impure) - the assumption that "if there's money to be made, some other entity will rise to the challenge" is not supported by evidence in small markets (such as ACTH). If it weren't, there would be no need for antitrust laws.
[+] [-] narrator|10 years ago|reply
"Under monopoly, a greater part of the specific factors of production concerned will remain unused. The common feature of all instances of monopoly prices is that part of the supply, which under competitive conditions would have been offered on the market, is withheld from the market. The most spectacular and objectionable instance of this withholding is the purposeful destruction of the commodities concerned. It happened mostly with consumers’ goods (e.g., coffee) but sometimes also with factors of production."
There are other sources of this drug, notably foreign production, but they don't have the proper licensing. Thus you get a license monopoly. There are a lot of drugs developed overseas that are effective but they are unknown in the U.S market because they are not approved by the proper license monopoly granter. Under pure capitalism, these products would be allowed on the market and independent rating agencies would ensure their quality.
[+] [-] mumumuyou2|10 years ago|reply
[+] [-] jostmey|10 years ago|reply
So why not order the drug from China or India? Is the drug expensive to manufacture? Or is it that the Canadian government will only order the drug from select countries? I wish the article dug a little deeper.
[+] [-] Cass|10 years ago|reply
I also like this quote from a New York Times article:
“If I have to follow U.S. standards in inspecting facilities supplying to the Indian market,” G. N. Singh, India’s top drug regulator, said in a recent interview with an Indian newspaper, “we will have to shut almost all of those.”
The unease culminated Tuesday when a top executive at Ranbaxy — which has repeatedly been caught lying to the F.D.A. and found to have conditions such as flies “too numerous to count” in critical plant areas — pleaded with Dr. Hamburg at a private meeting with other drug executives to allow his products into the United States so that the company could more easily pay for fixes. She politely declined.
http://www.nytimes.com/2014/02/15/world/asia/medicines-made-...
[+] [-] imgabe|10 years ago|reply
Not that someone who really needs the drug couldn't seek out an online source to get it cheaply from overseas, but doctors may not be able to legally prescribe it from those places.
I don't have any knowledge on the subject though, just speculating. At least in the US buying directly from overseas pharmacies seems to be more or less illegal.
[+] [-] mumumuyou2|10 years ago|reply
[+] [-] forrestthewoods|10 years ago|reply
(note: I did specify generic drugs. Not drugs still under patent exclusivity windows. Which is a valid but separate discussion.)
[+] [-] pja|10 years ago|reply
http://slatestarcodex.com/2015/09/24/the-problems-with-gener...
[+] [-] scoot|10 years ago|reply
Not to excuse the hike, but lets call it what it is - a 20 times increase.
Any use of percentages over double-digits is asking for confusion. And using a four-digit percentage is intentionally misrepresenting the scale of the increase.
[+] [-] trhway|10 years ago|reply
and government chickens out and fails to protect its citizens. The government has the power to treat it for example as public utility and negotiate the price based on that premise.
[+] [-] emergentcypher|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] T3RMINATED|10 years ago|reply
[deleted]
[+] [-] josteink|10 years ago|reply
Patents are after all an artificial (and supposedly temporary) monopoly enforced by society on behalf of a private entity, because society deems the value of this protection will create something beneficial to society as large.
Using patents to bump prices of existing, already profitable medicines hardly seems what patents were made for.
[+] [-] danielahn|10 years ago|reply
[+] [-] hentrep|10 years ago|reply
Drug development is hard, expensive, and littered with failure. There isn't a simple approach to this problem.