Martin Shkreli got arrested

[robnplunder]

What is the minimum, maximum sentence he can get if he is found guilty of all the charges? I have a feeling we will see him running another scheme, or company even after this.

 

[explanade]

Yeah but I'm guessing you don't like regulations that require drug trials before they are approved to be sold.

Like I said, other industrialized countries have the same or more stringent regulations for drug approval and they don't have high drug prices.

So you didn't selectively quote that fact did you, since it goes against your claim?

 

[MichaelB]

I don't buy that drug prices are high due to regulations.

The EU countries have much more stringent regulations and they don't have to pay such high prices.

So, we agree that laws/regulations are driving up prices of pharmaceuticals.

Actually, you both may be right. Prices are high because people pay them. Or, insurers pay them and then pass along the high prices. Demand is strong, even at these price levels. In addition, pharmaceutical companies are able to limit competition by exploiting a flawed regulatory system. The two factors together lead to the sky high prices charged in the US.

 

[Big_Hitter]

What is the minimum, maximum sentence he can get if he is found guilty of all the charges? I have a feeling we will see him running another scheme, or company even after this.

I think the feds have a new point system now. Those sentenced under those guidelines serve very long, strict sentences even for first-time offenders. Well, long compared to violent criminals IMO. Look up Stanford, Madoff or...even better, A&O Life....

I think Christian Allmendinger is doing 45 years or something. Heck Dave White got 5 years and only worked there 5 months. I think he just got out.

Forbes Welcome

I don't envy this kid. If he's found guilty on any of these charges he's going to the can, probably for a long time.

 

[Fermion]

Yeah but I'm guessing you don't like regulations that require drug trials before they are approved to be sold.

Like I said, other industrialized countries have the same or more stringent regulations for drug approval and they don't have high drug prices.

So you didn't selectively quote that fact did you, since it goes against your claim?

I do not think this is true. Gilead markets Harvoni, a cure for Hep C which had no high success cure previously. The USA does pay the most, but other industrialized nations pay a reasonable fraction. I think Japan is paying 80% or so of the USA price.

Places like India pay pennies, but they are essentially third world nations. They also ignore most patent protections if you try to charge more than pennies.

As an investor, I have mixed feelings here. I have invested in Gilead and made a bit of money, but I have lost quite a bit of money in other biotech companies who tried valiantly to bring a drug through the many many phases the FDA requires and ultimately failed. I think there is survivor bias when we look at the few, big successful pharma.

To date, nobody has offered to reimburse me for the money I have lost on biotech companies which spent billions of investor money and ultimately went bankrupt. I have to rely on the higher prices of the few drugs which make it to market to offset these losses.

There is a good reason that most small biotechs are shorted something crazy (sometimes 30% or more of the float short). Funds know most of them are going to fail. The rare ones that do succeed deserve big rewards or there is no incentive to invest in any of them.

Would you buy an index fund if there were only going to be 1 or 2 winners out of 20 to 50 and those winners were going to have their product profit capped by the government? Would anyone buy Apple stock if the government decreed I-phones must be sold for $99 no contract?

 

[explanade]

iPhones aren't priced way out of line compared to other phones. The Samsung phones are nominally priced the same but they often have sales to move them, like instead of paying $199 down, they might let you pay $99 down or even 0 during one of these promotions.

But even iPhone had promotions during this Holiday season.

And all phones have to be FCC certified, not to emit more EMI radiation than allowed.

Now they make $99 or cheaper phones for markets like India but besides lower spec components, do they avoid having to certify devices for the market? Like having things like shielding?

 

[Fermion]

iPhones aren't priced way out of line compared to other phones. The Samsung phones are nominally priced the same but they often have sales to move them, like instead of paying $199 down, they might let you pay $99 down or even 0 during one of these promotions.

And Gilead did not price its Hep C cure way out of line compared to other Hep C treatments. They priced it at about $90,000 with a 95% success rate. Other options were about $200,000 for a combo of drugs with horrible side effects and a 10% cure rate or you could live with the disease and eventually get a liver transplant at about $400,000 to $600,000.

They also had promotions where people who could not afford the drug and did not have insurance could still get it.

 

[Texas Proud]

Yeah but I'm guessing you don't like regulations that require drug trials before they are approved to be sold.

Like I said, other industrialized countries have the same or more stringent regulations for drug approval and they don't have high drug prices.

So you didn't selectively quote that fact did you, since it goes against your claim?

The gvmt in other countries pays for the drugs... so THEY negotiate a price with the companies... if there is only one purchaser, it is kinda hard to over price the product... they can just refuse to buy....


Here, there are no alternatives.... the gvmt cannot negotiate BY LAW.... the insurance companies have to pay the going rate if the drug is approved... I had one doc prescribe a cream that was $300... even though insurance was going to pay most of that I called and said I wanted an alternative that was $10... the $10 drug worked just fine....

 

[explanade]

How did it become the law that govt. can't negotiate?

Canada has nationalized insurance but Americans were able to go up and buy drugs at much lower prices.

I believe drug prices are also lower in Mexico and other parts of Latin America.

 

[audreyh1]

How did it become the law that govt. can't negotiate?

Canada has nationalized insurance but Americans were able to go up and buy drugs at much lower prices.

I believe drug prices are also lower in Mexico and other parts of Latin America.

It's something Congress passed. Medicare is not allowed to negotiate drug prices. That is probably a big contributor to soaring medical costs in the US.

It was part of the 2003 legislation that created Medicare Part D - http://blog.cahealthadvocates.org/2014/05/why-cant-medicare-negotiate-lower-drug-prices-for-part-d/

 

[neihn]

Would anyone buy Apple stock if the government decreed I-phones must be sold for $99 no contract?

One would definitely not die if he/she does not own an iPhone. Enough say?

 

[explanade]

Oh I know, that's my point, pharma lobbying is a big cause of high drug prices in this country, not FDA-required drug trials.

 

[Calico]

Santa must have gotten my letter early this year, because seeing this guy behind bars was at the top of my Christmas list.

 

[Fermion]

One would definitely not die if he/she does not own an iPhone. Enough say?

The iPhone would never be invented if it could not be sold for a profit.

 

[pb4uski]

Actually, you both may be right. Prices are high because people pay them. Or, insurers pay them and then pass along the high prices. Demand is strong, even at these price levels. In addition, pharmaceutical companies are able to limit competition by exploiting a flawed regulatory system. The two factors together lead to the sky high prices charged in the US.

Perhaps they should impose limits on drug profitability like they do on health insurers (minimum loss ratio requirement).

 

[dand76]

Can you say Karma is a bitch?

Hopefully he will make a fellow prison mate a fine little bitch.

Going bankrupt and contracting HIV. Now that's Karma.

 

[Fermion]

Perhaps they should impose limits on drug profitability like they do on health insurers (minimum loss ratio requirement).

Or they could eliminate the requirement for years of expensive drug trials and also eliminate liability for side effects from the drugs.

I am sure if a drug maker did not have to spend 4B to 10B to bring a single drug to market they would be willing to sell much cheaper.

 

[neihn]

The iPhone would never be invented if it could not be sold for a profit.

Comparing an iphone vs life saving drug?

 

[Fermion]

Comparing an iphone vs life saving drug?

Perhaps we need a lot more government money funneled into drug discovery if we want to claim possession of these inventions.

We are essentially saying the private market has failed if we put significant caps on drug prices.

I guess we could have taxpayers fund phase I to phase III trials and also be responsible for future lawsuits if a drug passes trials but is later found to have problems. The drug makers would just be a factory and the government could set the price as low as they wanted.

Investors would stick to funding I-phones and restaurants and electric cars.

 

[pb4uski]

Or they could eliminate the requirement for years of expensive drug trials and also eliminate liability for side effects from the drugs.

I am sure if a drug maker did not have to spend 4B to 10B to bring a single drug to market they would be willing to sell much cheaper.

Well, there is a delicate balance between being prudent and being careless. I don't know enough about the process (even though a friend works in pharma in drug development and I see what she goes through) to have an opinion whether the current process is too conservative or not, but given the way the government frequently goes overboard, it would nto be surprising if they are being too prudent.

Note that I would expect the drug makers to recover their costs and make a profit, just not an excessive profit. For some drugs that may still mean that they are still very expensive because of high development costs.

 

[EastWest Gal]

Remember that the drug he sold for $750/pill is 62 years old and is no longer under patent. In India, it costs 10 cents a pill. There aren't a lot of people in the U.S. who will need the drug: those with toxoplasmosis, usually AIDS, pregnant women, and congenitally infected newborns, who can be treated even in the womb by treating the mother, which is most desirable for improved outcome.

This isn't about research dollars for new meds, it's about price gouging AIDS patients and pregnant women to treat a life and brain threatening infection.

Wrong is wrong. May the man rot in hell, or at least in prison.


Sent from my iPhone using Early Retirement Forum

 

[razztazz]

Remember that the drug he sold for $750/pill is 62 years old and is no longer under patent. In India, it costs 10 cents a pill. There aren't a lot of people in the U.S. who will need the drug: those with toxoplasmosis, usually AIDS, pregnant women, and congenitally infected newborns, who can be treated even in the womb by treating the mother, which is most desirable for improved outcome.

This isn't about research dollars for new meds, it's about price gouging AIDS patients and pregnant women to treat a life and brain threatening infection.

Wrong is wrong. May the man rot in hell, or at least in prison.

Sent from my iPhone using Early Retirement Forum

He said it was about shareholder value. What is price gouging? Certain behavior of corporations s prescribed by law. Shareholder value is in there. It prevents absconding with investor's money. Price gouging? Just why we have the system we have and why we must maintain it? I don't know what it says about that. (It likely says nothing)

Note that I would expect the drug makers to recover their costs and make a profit, just not an excessive profit.

What is an excessive profit? Adam Smith mentioned them, was against them and the whole concept. I don't recall what his fix for it was though. The law says shareholder value is paramount for corporate behavior. It's against the law or at least you can be taken to court for -not- making enough money under certain circumstances. Not squeezing as much money out of consumers, or medicare, or insurance companies as you possibly can is actually one of those reasons. But, of course, an ongoing and pervasive criminal mentality will always work these things for themselves, which by definition means to the detriment of others, under full cover of the law.

 

[ERD50]

If anyone expects others to act ethically, they are going to be disappointed. For one, ethics means different things to different people.

As far as this high $ drug pricing goes, I think it should point out that the laws/regs need to be changed. Maybe I'm missing something, but it makes no sense that he was allowed to obtain a monopoly on an old generic drug. Take that away, and he would not have been able to do this.

I want the govt to foster innovation, but that has to be tempered with not creating monopolies. A patent is essentially a specific/narrow monopoly for a limited time. That makes sense on some levels,to allow the creator to recoup their R&D, but our patent laws have lots of problems.

-ERD50

 

[razztazz]

If anyone expects others to act ethically, they are going to be disappointed. For one, ethics means different things to different people

This is the inherent failure of communism AND capitalism. Proponents of both seem to insist that if people do whatever they want with no interference that which is best for everyone will be the result. Obviously a laughable basis immediately disemboweled by any real life experience .

I want the govt to foster innovation, but that has to be tempered with not creating monopolies. A patent is essentially a specific/narrow monopoly for a limited time. That makes sense on some levels,to allow the creator to recoup their R&D, but our patent laws have lots of problems.

The government is supposed to look out of The People's interests. The interests of a business after that are the businessman's problem. But that's not how it seems to be going.

 

[ERD50]

...

The government is supposed to look out of The People's interests. The interests of a business after that are the businessman's problem. But that's not how it seems to be going.

And it's a tough balancing act. On one hand, you can say patent protection benefits the business. OTOH, the people benefit from the innovation that comes from a business having a little more assurance that they can profit from the innovation.

So it probably helps us all to have some protections for the business. But how much is a tough thing to settle.

-ERD50