Martin Shkreli got arrested

[explanade]

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.

First of all, I don't know about this $4-10 billion to bring a drug to market.

But actually the big pharma companies spend more on advertising and marketing their drugs than they do on R&D.

Secondly, govt. funds a lot of NIH research and the pharma companies use a lot of that research for free. As someone noted earlier in the thread, in many cases, they just change molecules of a formulation a little and extend their patent protections.

Pharma is one of the most lucrative industries there are.

 

[pb4uski]

.....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.

As a society we have limitations on prices and profits in numerous regulated industries like health insurance, electricity, cable, life insurance and others so these is ample precedent for defining what an excessive profit is.

I challenge you to provide a citation of a statute that says shareholder value is paramount as you claim. Ditto for a successful lawsuit for not making enough money.

Taking advantage of customers as Turing did is not a good way to maximize long-term shareholder value.... a competing drug compounding firm swooped in and made a substitute that cost $1 so Shkreli's decision to jack up the price and gouge customers ended up destroying shareholder value rather than creating it.

 

[Fermion]

Secondly, govt. funds a lot of NIH research and the pharma companies use a lot of that research for free. As someone noted earlier in the thread, in many cases, they just change molecules of a formulation a little and extend their patent protections.

Pharma is one of the most lucrative industries there are.

This is tossed around A LOT. Perhaps if they did not have the springboard of the initial govt. funded research (not everything is govt. funded btw) then drug costs would be $15B to $20B instead of $4B to $10B.

I am not talking about the case of buying a 62 year old drug, I am talking about a new drug, like the cure for Hep C, which cost Gilead $11B and it wasn't even in phase 2 trial yet.

I can give you a near endless list of smallish pharma who are on the pink sheets with just a few million dollars left after they have spent billions of investor money on drugs that failed. The drugs that succeed have to pay for these failures as well as the costs to get the successful drug through the trials or it makes no sense to invest in pharma (unless you do it as a charity).

 

[pb4uski]

....Pharma is one of the most lucrative industries there are.

It may seem that way but their returns are higher than average they are not the most lucrative. I get 31 industries whose returns exceeded pharma.

Return on Equity

 

[razztazz]

As a society we have limitations on prices and profits in numerous regulated industries like health insurance, electricity, cable, life insurance and others so these is ample precedent for defining what an excessive profit is.

I know and concur.

I challenge you to provide a citation of a statute that says shareholder value is paramount as you claim.

I challenge you to etc etc. This is pretty common knowledge and not an extraordinary claim. Provide statutes? Funny. Pettyfogging is a game I blithely flip-off. Sorry.

Ditto for a successful lawsuit for not making enough money.

Again. I am not a law library. As that would make a difference.
I do not engage is vapid table pounding.

Taking advantage of customers as Turing did is not a good way to maximize long-term shareholder value....

I agree but....Doesn't have to be. As long as it meets their immediate goals it's good enough. For them. They're making the decisions. And any businessman is allowed to be wrong.

a competing drug compounding firm swooped in and made a substitute that cost $1 so Shkreli's decision to jack up the price and gouge customers ended up destroying shareholder value rather than creating it.

He didn't give shat about anybody's money but his own IN THE MOMENT. Businesses hide behind that shareholder value thing all the time. He is under no more obligation to get it right than anybody else.

So want you'e saying is all businesses everywhere all the time always make the right decisions for all the right reasons? Yes. Incorrect.

 

[pb4uski]

.....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. ....

....I challenge you to provide a citation of a statute that says shareholder value is paramount as you claim. Ditto for a successful lawsuit for not making enough money. ....

....This is pretty common knowledge and not an extraordinary claim. Provide statutes? Funny. Pettyfogging is a game I blithely flip-off. Sorry.

Again. I am not a law library. As that would make a difference.
I do not engage is vapid table pounding. ....

Ok, let me restate. There is no law requiring corporate executives to maximize shareholder value.... it is a generally accepted principle that management's job is to maximize shareholder value but there is no law requiring it as you claim. If you think there is, then put up or.....

Also see:

Maximizing shareholder value

This management principle, also known under value based management, states that management should first and foremost consider the interests of shareholders in its business actions. (Although the legal premise of a publicly traded company is that the executives are obligated to maximize the company's profit, this does not imply that executives are legally obligated to maximize shareholder value.)

 

[robnplunder]

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

He's not in jail yet. Hopefully, the charges stick and he is put away for a long time.

 

[razztazz]

(Although the legal premise of a publicly traded company is that the executives are obligated to maximize the company's profit, this does not imply that executives are legally obligated to maximize shareholder value.)

I am talking principle and you're pounding words and apparently something else. I covered all that in my statements. The end.

 

[pb4uski]

I agreed in principle, I just objected to your assertion that it was a legal requirement... that's all. Done.

 

[robnplunder]

I agreed in principle, I just objected to your assertion that it was a legal requirement... that's all. Done.

For critical (life saving, e.g) drugs, should there be a regulation on how much mark up, or increase a company can do? When I first heard about the price hike story, it struck me as an illegal thing to do.

 

[samclem]

For critical (life saving, e.g) drugs, should there be a regulation on how much mark up, or increase a company can do? When I first heard about the price hike story, it struck me as an illegal thing to do.

If the drug isn't under patent protection (as in the case here), then all that is required is to assure there is an opportunity for competition (something that was not done here). If another US company could have started production rapidly or if Indian , Canadian, or other supplies could have been available here for $10 per pill, then Shkreli wouldn't have bought the company to commence his pillaging. The answer isn't a cap or price controls, it is reducing barriers to competition. The FDA (slow approvals for new producers of existing drugs) and US laws against drug importation create the environment for this abuse, and generally keep drug prices higher than they would otherwise be. We should fix the problem, not the symptom.

 

[NW-Bound]

If the drug isn't under patent protection (as in the case here), then all that is required is to assure there is an opportunity for competition (something that was not done here). If another US company could have started production rapidly or if Indian , Canadian, or other supplies could have been available here for $10 per pill, then Shkreli wouldn't have bought the company to commence his pillaging. The answer isn't a cap or price controls, it is reducing barriers to competition. The FDA (slow approvals fordrew producers of existing drugs) and US laws against drug importation create the environment for this abuse, and generally keep drug prices higher than they would otherwise be. We should fix the problem, not the symptom.

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.

He's a scummy guy and his arrest is good news. But let's not lose sight of the circumstances that made his previous "price gouging" possible: He was largely immune to the threat of competition because he was able to purchase an FDA-guaranteed monopoly.

And we can't freely import the drug from India because--well, because of other laws/regulations.

+1 +1 +1 +1

This guy was able to create a monopoly on Daraprim because of bad FDA regulations. Free-market principles would have worked here, if it were not for bad laws.

We cannot regulate greed, but we should be able to keep greed from causing harm to society if we have the right laws.

 

[explanade]

I remember hearing that there's a problem with anti-venom serums because few companies are still making the serums, which is still a very manual intensive process.

This isn't a problem with the FDA because the shortage is occurring in the sub tropic countries where the venomous snakes are found.

So the few producers who make it charge a lot and they have a monopoly not because of regulations but because the drug companies have abandoned the market.

You leave it to the free market and the only drugs they'll make are for ED and other afflictions that they could advertise the hell out of.

Private companies have a responsibility to shareholders to maximize profits so they won't pursue drug treatments for some types of conditions unless there's a huge profit potential.

Govts. can't force private companies to make certain drugs but maybe they should consider producing some where there's a need. Then, like Internet providers responding to municipal broadband, the private companies will probably rush in.

As for Daraprim, I thought some other company said they would be producing in the US after this story became big?

 

[explanade]

Skureli or whatever his name is saying the govt. pursued him because of his notoriety and so the hedge fund and ponzi scheme charges are fabricated.

It's probably that some prosecutor decided to look into this despicable figure's life, to see if there was something to prosecute him for.

Now the question is whether they found a case which has merit or they are making a leap, railroading him in effect, because of his notoriety with Daraprim.

 

[pb4uski]

...Now the question is whether they found a case which has merit or they are making a leap, railroading him in effect, because of his notoriety with Daraprim.

I'm not sure if I care... either one would be fine with me for that low life, POS.

 

[Walt34]

I remember hearing that there's a problem with anti-venom serums because few companies are still making the serums, which is still a very manual intensive process.

This isn't a problem with the FDA because the shortage is occurring in the sub tropic countries where the venomous snakes are found.

So the few producers who make it charge a lot and they have a monopoly not because of regulations but because the drug companies have abandoned the market.

I've seen articles about that and suspect part of the issue is that while badly needed, how much of a market is there for anti-venom drugs? In my whole life I've only known one person who was bitten by a venomous snake. And I've seen the videos of how they get the venom - not a job I would take!

Still, it has to be a second shock to the system to get bills like these. In the first article the woman didn't have any medical insurance and got a bill for $55k. Yikes!

Snake Bite Victim Gets $55K Hospital Bill | NBC4 Washington

$143K Hospital Bill Shocks Snake Bite Victim - 10News.com KGTV ABC10 San Diego

‘Sticker Shock’: Snake Bite Victim Charged More Than $80K for 18-Hour Hospital Treatment | TheBlaze.com

 

[MichaelB]

Now the question is whether they found a case which has merit or they are making a leap, railroading him in effect, because of his notoriety with Daraprim.

Not likely. Securities fraud is not easy to prosecute, and a case takes a long time to build. His notoriety might have motivated them to dig a little deeper and move a little faster.

 

[pb4uski]

....Still, it has to be a second shock to the system to get bills like these. In the first article the woman didn't have any medical insurance and got a bill for $55k. Yikes!

Snake Bite Victim Gets $55K Hospital Bill | NBC4 Washington

$143K Hospital Bill Shocks Snake Bite Victim - 10News.com KGTV ABC10 San Diego

‘Sticker Shock’: Snake Bite Victim Charged More Than $80K for 18-Hour Hospital Treatment | TheBlaze.com

Good reason to maintain health insurance. You never know what might happen.

 

[samclem]

The occupational hazards of being an opportunistic shark-- the need to be entirely "clean" and to be sure you'll never, ever need a break or the goodwill of anyone.

An interesting question: "Would you take $5 million in legal gain if it meant you would also become widely reviled by the public?"

 

[explanade]

Anti-venom is just one example.

Remember after 9/11 there was an anthrax scare and it turned out there weren't enough vaccines so they had to start cranking them out. Presumably there would have been plenty of profit with the govt. being a big payer.

 

[samclem]

Anti-venom is just one example.

Remember after 9/11 there was an anthrax scare and it turned out there weren't enough vaccines so they had to start cranking them out. Presumably there would have been plenty of profit with the govt. being a big payer.

What point are you trying to make? What actually happened was the sole US manufacturer didn't seek to take advantage of the situation. They cranked up production, costs stayed at about $20-$28 per dose. The government poured almost $1 billion into efforts to develop another vaccine or a second supplier--that effort never produced any vaccine at all.

If the original manufacturer had tried to charge an outrageous amount, I hope the government would have streamlined approvals for other manufacturers.

In situations like these, the best approach is for the government (or whoever might need the stuff) to stockpile a limited "starter" amount and to pay a company to maintain the ability to surge production. Negotiate prices in advance of need so you pay the " non panic" rate.

 

[redduck]

...An interesting question: "Would you take $5 million in legal gain if it meant you would also become widely reviled by the public?"

You mean I could have asked for $5 million?!!!

 

[NW-Bound]

You mean I could have asked for $5 million?!!!

No, you could not have.

Whatever bad thing you personally did was not notorious enough to warrant such a loot.

 

[Running_Man]

If the drug isn't under patent protection (as in the case here), then all that is required is to assure there is an opportunity for competition (something that was not done here). If another US company could have started production rapidly or if Indian , Canadian, or other supplies could have been available here for $10 per pill, then Shkreli wouldn't have bought the company to commence his pillaging. The answer isn't a cap or price controls, it is reducing barriers to competition. The FDA (slow approvals for new producers of existing drugs) and US laws against drug importation create the environment for this abuse, and generally keep drug prices higher than they would otherwise be. We should fix the problem, not the symptom.

Any company qualified could undertake making this drug, problem is there was only 8,000 prescriptions per year. It is not profitable to compete against a drug with 8,000 prescriptions from $13.50 per pill to $750 yet a competitor did make a generic version available for $1.00 per pill yet that is not well advertised, instead it is held up as an example for the need for more laws/regulations. If the new competitor were to gain the entire market for this they will have $240,000 in revenue. If they were to go to the 1 cent India pricing model there would be $2,400 of sales. Nobody is looking to get into a market like that other than for positive public relations.

Competitor Offers $1 Drug After Turing's Controversial $750 Price Hike

The larger issue with Shkreli is that he violated existing laws for about a decade and even with complaints filed against him the government did not prevent him from getting in charge of a pharmaceutical company via fraud until years after he did it. Instead of issuing new laws consistently enforcing existing laws would be a nice change, good to see he is going to be prosecuted although it seems he loves the attention more than being worried about looking bad. I suppose he is hoping to be portrayed by Leonardo DiCaprio in a movie about his lifelong goals on how to improve the shameful pharma industry and make a suitable comeback as his redemption as out for the good of humanity. It is what makes a long con so profitable in the long run.

 

[meierlde]

I agreed in principle, I just objected to your assertion that it was a legal requirement... that's all. Done.

Put a bit more cynically the goal of a ceo is to keep his job which means keeping the board happy, which means keeping the shareholders happy. After all there is a huge market in corporate control (see the takeover artists etc). and if as CEO your company does not perform well, then a takeover artist will come in and the CEO will be thrown out the door, by the new board (who also want to keep their extremely cushy jobs of making 1-5k plus per hour of work on large company boards.