Drug Goes from $13.50 a Tablet to $750, Overnight

Once I read up on Martin Shkreli I told them that I did not think it was the kind of place for me and withdrew. I have no idea if they would have hired me or anything, but just reading about him gave me a sick feeling in my stomach.

I'm honestly looking for an answer here. Maybe there is a good reason Valeant can and should be able to get away with it.

Or the government passes a law capping how much you can raise the price of a generic drug over so many years.

http://blogs.sciencemag.org/pipeline/archives/2015/08/19/bio...

http://www.fool.com/investing/general/2014/07/13/warren-buff...

What no one seems to be discussing here, is why there is such a long approval process from the FDA for generics? Ideally, someone should be able to ramp up production of this quickly, but apparently it takes years just to get the FDA to test your generic, even if its detected in the lab as being 100% chemically identical to the now expired patented drug. Turing is using this lag time to its benefit, but why aren't we yelling at the FDA to move faster on this kind of thing? I guess this might be moot because Turing can simply drop prices to scare off the investors of this hypothetical generic competitor. Say its x amount to launch this and they need to sell at $25 a pill for 10 years to break even. Turing now drops its price to $24 a pill. They're going to have a lot more flexibility here than someone entering the market from scratch and as long as they're selling above the old generic rate, they will continue to make serious money.

Also, from perhaps a less practical POV, considering what the government spends on medicare (3% of our GDP), perhaps it should be building its own generic drug producing plants. Private industry has 20 long years to make profit on patented drugs, but after that it should go into a federal program. This avoid these situations entirely, cut costs, etc. Or regulate prices on generics, or heaven forbid, finally bite the bullet and migrate into a Euro-style socialized medicine/single payer system and be able to bargain with big pharma as one 800lbs gorilla as opposed to hundreds of 6lbs capuchins.

Expecting people seeking profit to "act nice" is asinine. We can insult Shkreli all day but it doesn't change the status quo. Even if he's an outlier, how long is your average white collar criminal case resolution, assuming he's even doing something illegal? 2, 3, 4, or even 5 years? That's a long time for a drug to be off market or be unaffordable to people who need it.

Right now a lot of people are looking at this business plan with envy. In fact, this kind of generic trickery is status quo - see the "reformulations" of generics and then stopping production of that generic. The system is broken if it allows this kind of thing. What we need is a system that's not broken and that can't be gamed this easily. The current regulation model guarantees companies like Turing doing exactly this.

Sadly, online discussions often degenerate into witch-hunts with the assumption that if we stop this one guy, then everything will be fine. I guess its much less emotionally satisfying to discuss systemic political or regulatory issues.

I like the fact that HN is a particularly civil place - it's in the guidelines. Now granted, AVG or Martin Shkreli aren't a member of the HN community in a very narrow sense (though I'm sure AVG engineers read it), unlike a startup founder. But I would appreciate it if you would hedge your statements, lead with the facts, and make them subjective.

It may sound like reserved understatement if you do so, but people here know how to read between the lines. I don't object to any of the facts you've presented, in fact your view is appreciated here, and you don't have to be "neutral", you're not Wikipedia.

I just wish you would take a moment and phrase it more carefully. HN has a rule, no gratuitious negativity, and civil discourse. (Again I'd like to emphasize that I enjoyed reading your take and the facts you've presented.)

EDIT: This comment is now at -4. I'm sorry, downvoters are not following HN policy. "Simply put, Martin is a sociopathic criminal with a well-established, and consistent track record of deceit, recklessness, failure, and just plain old stupidity" without references, and "In all my years of investing, he is one of the most unique scumbags I've ever come across" is extremely inflammatory. As you can see from the number of replies that it has generated. We don't need to make HN reddit.

The facts speak for themselves - when they're presented.

http://www.who.int/selection_medicines/committees/expert/20/...

It's not a huge list of medicine. It would seem to be reasonable to allow people to make and sell the meds on this list for profit, without allowing them to engage in the scumbag behaviour submitted article talks about.

I don't know if patents should be abolished completely, but if there's a discussion about a serious patent reform, we should stop considering pharmaceuticals as some kind of exception, and apply the new reform equally to everyone, instead of allowing exceptions for Big Pharma, or worse, watering down reforms to protect Big Pharma.

This is not specifically in reply to the parent, but the point fits here: I'd observe that calling for more regulation or even outright nationalization to fix this, when it's probably already illegal, is not thinking very clearly. Regulations are already failing to prevent this... how is enacting more things that make illegal things illegalier going to actually solve the problem? How is doing the same, but more, actually going to help?

But I think two things are happening: 1. The price of the drug was artificially deflated. 2. The somewhat-free market is deciding how to handle the correction.

If the market for this drug was interfered with and the price was not allowed to go up, who's to say the manufacturer couldn't just discontinue the product? Would that help?

There is a little more user-friendly info here: http://www.drugs.com/availability/generic-daraprim.html

Just look at antidepressants, where doctors have to slog through a huge number of different options (not just different classes, like SSRIs or SNRIs, but often radically different drugs within those classes) to find the right drug therapy that works for each individual patient. Choosing the right medication, and the right dose (which can have a huge effect on how the drug functions) can mean the difference between someone living a healthy, productive life and suicide.

Drug R&D is an entirely different ballgame than basic science. And there's already countless examples of how basic science funding, from appropriations to attempts by politicians to interfere with the grants process, can be screwed up. Hell, just the amount of funding necessary to replace private drug R&D would be a significant political expenditure. And here's a fun consequence: how long will it be until some arrogant politician comes along and complains about how drugs developed with American taxpayer dollars are being provided to foreign countries? I can see it now, and it's terrifying: some bullshit slogan like "American drugs for Americans" should terrify you, too.

Even under the best case scenario, public funding would mean tradeoffs: research option A or option B, but not both if there's any overlap. And that's before politicians start playing games and before budget cuts start impacting research. Maybe the solution is to have manufacturer bids be sufficient to cover those R&D costs? Congratulations, you're right back where you started, with drug costs either the same or negligibly less. And where does the money go? If it goes into the state's general funds, politicians will use that money for their own special interests and pet projects. If it goes into an earmarked fund, politicians will cut back taxpayer funding by an equal or greater amount. You can see textbook examples of each with federal infrastructure funds and education funding in states that host lotteries "for the children."

Simple idea in theory, horrible in practice. Unintended consequences are still consequences.

As for antibiotics, that's a bit of a different case. There are a lot more arguments for public funding in these sorts of circumstances, where pharmaceutical companies can't research and bring a drug to specific, niche markets. Antibiotics are a classic example, especially when you consider the broader public health risks associated with the rise in antibiotic-resistant strains.

-They have reduced or eliminated co-pays so no patient is paying as much out of pocket as they used to

-The drug is still 50% given away to people who cannot afford it

-The company ships drugs to patients before resolving disputes with insurance providers

-Shkreli's view is that it is in the best long term interests of the public to have a drug that can be insanely profitable be insanely profitable because it creates an incentive to create another better drug

-On that line, the company is researching new alternatives to the drug which are less toxic (ie: cannabalizing its own market)

There may be a need to look at enforcing some more openness to formulas and manufacturing process so that after patents expire it's less possible to maintain an exclusive on a generic. That is consistent with the intent of patent protection and encourages open markets and competition.

If the federal government had locked down all IT development in the 1980s as you proposing they do for pharmaceuticals, we wouldn't have this forum to comment on, much less the industry it is built around.

In typical US fashion, though, the profits are privatized.

Actually, I don't believe letting the government take over would be good in the long run. The most direct fix would be to immediately revoke the various laws that disallow American citizens and companies from buying approved drugs in foreign markets at massively reduced prices and then reselling them in the US.

Big pharma has for years now been slashing their US workforce and moving to third world countries. Another example of labor getting to compete in the global market, while capital enjoys privileged advantages.

http://www.cepr.net/publications/reports/the-benefits-and-sa...

You really don't want medical science led by popular opinion.

Instead I have to go ask permission from the government, fight for funds, wait for approval, build massive infrastructure just to prove to the government I'm not wasting their money, and so on?

I've worked on government contracts - defense - most of my career. It is not a model of innovation, low costs, fast delivery, friction-less pivots, and the like. It's a story of incumbents, outdated regulations (waterfall for the win!), inability to get money for great ideas, buckets of money thrown at bad ideas, cronyism, lobbying, you get the idea.

It's trivial, and lazy, to talk about "big pharma" - to paint them as evil. Yes, there is plenty of less than stellar activity, and I had a gf that was in the business. But she also worked for a small start up that would probably be impossible under your model. That world is full of idealistic people that want to do good in the world. And yes, there is also unsavory business practices. But so much good has come from people with a dream. Bethesda is the pharma equivalent of SF in tech. Lots of money flowing, lots of great ideas, lots of moon shots, lots of quick failures, lots of success. It ain't ideal (great ideas, no funding, for example), but I'd suggest your idea needs substantial sketching out to explain how it would successfully replace this sort of activity.

edit: my first job was working for a small company that contracted for NIH. In my short time there I heard so many stories of research being started, then something becomes the hot topic of the day, funding is withdrawn to throw it at this new topic, and the old project is left to die. Not that the new topic was a bad thing to pursue, but if you keep switching focus before getting results you are wasting tons of money. The NIH is regularly criticized for taking only 1 approach to a problem - investigate drug X or treatment Y. It's unbelievably hard to convince Congress that you should spend a ton of money on a research program, but then go and run 10 other programs that assume that that research program will not pan out. No, that's stupid. It's incredibly believable. I recall pulling all nighters, being called on the phone by congressmen or their aides, trying to pull data together for a presentation on the hill to get or continue funding. Ultimately politicians were making research and health decisions. Madness. Everyone I worked with had their hearts in the right place (beware the easy, lazy assumptions!). Individual politicians that I've run across are intelligent and trying to do the right thing as they understand it, and often that understanding is very sophisticated. But the system doesn't have a heart, whether that system is capitalism, start ups, or government.

It sounds like you're well on your way to realising the flaw in straight-ahead libertarianism and joining those in the mainstream who want just enough market regulation to allow free markets without a huge social cost.

I get the feel that most reasonable souls are in agreement on this. We merely differ in how much we think is 'just enough' and the point at which social benefits should trigger an intervention.

Both the right and left are also probably in agreement that historically speaking - intervention has been problematic and flawed.

How is this libertarian? This is the exact opposite.

Without the FDA other companies could easily produce this product, it's out of patient but the claim is they are using government regulation to slow competition down.

The exact opposite to libertarian.

It assumes that exploitation can be handled within the same system that spawned it -- the market -- and it simply can't.

Much of the underlying mathematics of modern market theory assume that expectations on transactions are positive. Markets only move toward efficiency under that assumption. That is why things like muggings, an exploitative transaction, can never lead to market efficiency.

Exploitation is where this assumption, and therefore the free market, breaks down. If a person might die if they don't make a deal that is clearly exploitation.

In this case the guy is taking advantage of government constructed barriers to entry but, at its heart, that plan can only be successful because there is an exploitative element to the original transaction. If this guy was selling interesting pencils, for example, such a plan would never pan out.

We need some sort of extra-market intervention in the case of potentially exploitative transactions. That is the litmus test and just the fumes from this company set it off.

Price shenanigans like this is prima facie evidence that the marketplace has become closed or uninformed. I still say the best solution is to correct that, not to try to make this illegal, especially when it probably already is.

The problem here isn't the market, corporations, or libertarianism. The problem is the government and its treatment of "imaginary property".

India also has a "last mile" problem with medical care. It's still too common for villagers to slip through the cracks and not receive regular diagnosis or treatment.

Other companies do similar things. Look at the treatment for Age-related Macular Degeneration - Avastin vs Lucentis.

Avastin is older, and cheaper. It's as effective as Lucentis. The same company makes both. That company refuses to try to licence avastin for use with AMD, which forces (at least, in the UK) doctors to instead use the very similar but very much more expensive lucentis. The compnay claims there are problems with avastin, but really those problems arise from incompetent handling ("People might use non-sterile needles to inject avastin! Lucentis comes in a pre-sterilised package!". Well, if you're worried about people using dirty needles you need to fix a lot more about that hospital.)

People are going blind because corporate greed.

If a quick run in the mass spectrometer was sufficient to start selling a generic, this crap wouldn't happen. I don't understand the knee-jerk calls for more regulation when it's clear that regulation is what's allowing this unethical business model to work.

You can't do that for these drugs, because the only way to get ahold of the namebrand drug is from the official supplier, and they won't sell it to you.

I will add my two cents, though. I think this is enabled by ACA and the drug companies are playing a dangerous game if they don't want to end up with Medicare-negotiated rates. Currently if you're uninsured or on a high-deductible plan you pay full price for drugs. If you've got a more traditional plan the insurance company and manufacturer play their typical monopoly money game. If you want more amo for the fire look into the price increases for EpiPen over the last few years.

It's a horrid way to think about it, and it's a horrid ethical system that gets developed when it all comes down to money.

The logic being followed by this particular pharmaceutical company is that because it's a niche market the impact of these large price hikes is minimal. However, the impact is not minimal for those that depend on the drug, who are getting stiffed, either left with prices they may not be able to afford or increased insurance costs (either paid by the individual or their employer).

There should be a cap on behaviour such as this, such as prices cannot increase 50% above inflation in a single year. Details would need to be worked out but at least controls such as this would give the market time to respond, bringing in new competition, etc...

What if the "reasonable" price is set by a delusional sociopath?

But with something like this, I believe they're just hoping it takes another company a long time to get approval to ship a generic equivalent.

So say we're in the US, and I am walking down the street and discover you in a hole in the ground that is full of water, and you are obviously about to drown. There is a ladder next to the hole, and you ask me to put the ladder in the hole; let's assume that I can do so at absolutely no risk or even significant effort - all I have to do is press a button. If I don't you will surely die.

Well in the US, I don't have to do anything. I can stand there and callously ignore your pleas and watch you die and I won't get in legal trouble for it (although I will probably become a social outcast). Unless you are a member of my family or I am some sort of emergency worker or similar person with a responsibility to render assistance (eg if I invited you into my yard and you then fell into a hole), I have absolutely no legal obligation to help you - I can't be charged criminally, and your anguished relatives won't prevail in a civil lawsuit. There is no law against me being selfish or even sadistic (by passively enjoying your suffering).

Of course the moral thing for me to do is to help you get out of the hole, and most people would say that I should be even willing to risk some danger to myself in order to save your life. But the law is not a moral system, and the current theory at this point in history is that the limitation on my liberty by being obliged to incur risk on your behalf is worse than the fact that you may lose your life. This isn't entirely arbitrary; you read up on tort law you'll encounter a depressing number of cases where incompetent people made a good-faith effort to help and ended up making things substantially worse.

I would also like to point out that I personally prefer the risk of helping out to doing nothing, but have long since given up assuming the same thing about other people :-/

Granted, this is import restrictions notwithstanding. Some substances can't even be brought across the border except under penalty of imprisonment for smuggling in a controlled substance. There are often no permits that one can acquire, which means that the drugs must be manufactured in the US.

I'm thinking about ways to elaborate and explain why it's so awful, but I'm imagining it's obvious to you. I'd imagine this story is making its rounds through all the major news outlets because it evokes soul-searching, not because people didn't know it was possible.

This company and this example of abusive trading will single-handedly drive further regulation of the pharmaceutical industry.

There is a special place in hell for people like Martin Shkreli.

Seems like a specious argument.