Daraprim/Turing Isn’t Alone, Shkreli learned from others

Health care is delivered  by an industry more interested in financial return than access, quality of care, efficiency or value.  It has become a financial play.  As an industry it offers a customer base that is desperate; products often with limited to no competition; and a market that’s protected by patents and a disinterested (paid off) congress.

But Shkreli isn’t the only abusive drug company CEO.  Consider these:

Gal pointed to three examples: Jazz Pharmaceuticals’ drug Xyrem, Questcor’s Acthar and Mylan’s EpiPen.


The company reported revenue from Xyrem of $29 million in 2006, the first full year after its acquisition. Last year, Jazz posted Xyrem revenue of $778.6 million.

While the company said it’s expanded the number of patients the drug treats, the cost also increased an average of 29 percent a year from 2011 to 2015, according to data distributed this week by Evercore ISI analyst Mark Schoenebaum.


H.P. Acthar Gel was initially approved in 1952, the year before Turing’s Daraprim, the subject of this week’s controversy. It treats infantile spasms and exacerbations of multiple sclerosis in adults, among other indications, and its price, as The New York Times reported in 2012, hopped from $1,650 to $23,000 a vial on a single day in 2007.


EpiPen, used in emergency treatment for life-threatening allergic reactions, is sold by Netherlands-based drugmaker Mylan. The price, according to data from Evercore ISI, increased 27 percent a year, on average, from 2011 to 2015, to more than $300 each dose.

Medicynical Note:  The only coherent explanation of what’s happening is that these robber barons have  cornered the market and are gouging for all they are worth…oh I mean all WE are worth.  Our health care non-system is uninterested in cost containment or for that matter delivering value because as the costs go up everyone’s share of the pie increases.

Except maybe for the doctors who are, ironically, the low men on the totem pole of the health care hierarchy.  It’s terrifying that the high men are hedge funders with only one interest, and it ain’t health care.


Health Care as A Market Play: (Daraprim, Shkerli) Nothing new here

People are outraged that a former hedge fund hack raised the price of a 62 year old drug that costs about a dollar to manufacture, from $13,50 to $750/pill.   He has now relented and will “decrease” the price–to an undisclosed cost.  Imagine that, arbitrarily pricing a drug to maximize profit?  Actually that is nothing new in the era of $100,000-$200,000/year for new drugs.

It’s difficult to conceive of a drug costing more than a luxury auto (a BMW or Mercedes for example)  or perhaps over a few years more than the cost of an average person’s home or even a multiple of the average yearly incomes of families.  But that’s what has happened in the U.S.  We have created a pricing monster that’s arbitrary and that’s  bankrupting individuals and the system.

Medicynical Note: This hedge fund refugee is not unique.  Drug company pricing is simply what they sense the market will bear.  Some of that is market economics but other aspects are the seriousness of the illness and the desperation of the patient. It’s your money or you life.

But at it’s heart we’re simple getting grifted by good ole capitalism.  Remember the goal of every capitalist no matter what they say about competition, is to eliminate it and have a monopoly.  That’s nirvana.   In pharmaceuticals this goal is facilitated by our patent law, aggressive often deceptive marketing practices and the need for safe drugs.  

Big Pharma has been pricing arbitrarily without regard for cost or value for years.  This clown simply said look here! the emperor has no clothes.  Gouge when you can. 

Our drug costs have predictably spiraled.  As to what would be a fair price for a drug costing $1 to manufacture and which has long established indications?  I’d say under $5.   But don’t bet on that!


Drug Companies: It IS the money, stupid

In case you were wondering,  drug companies business plans are designed to separate you from your money—not assure access to medications; provide value or promote good health.  In the case of medicine in the 21st century in the U.S. it truly is your money or your life.  This was again graphically illustrated by Turing Pharmaceuticals when it  raised the cost of a 62 year old medication from $13.50/ pill (over priced at that) to $750/pill. 

The drug, called Daraprim, was acquired in August by Turing Pharmaceuticals, a start-up run by a former hedge fund manager. Turing immediately raised the price to $750 a tablet from $13.50, bringing the annual cost of treatment for some patients to hundreds of thousands of dollars.

Turing’s price increase is not an isolated example. While most of the attention on pharmaceutical prices has been on new drugs for diseases like cancer, hepatitis C and high cholesterol, there is also growing concern about huge price increases on older drugs, some of them generic, that have long been mainstays of treatment.


While some price increases have been caused by shortages, others have resulted from a business strategy of buying old neglected drugs and turning them into high-priced “specialty drugs.”

Medicynical Note:  Kind of pathetic but that’s what happens when companies use their leverage on the sick and dying. 

It leads me to conclude that “medical ethics” and what was once known as the “ethical pharmaceutical industry” no longer exist.  It’s really all about money.

Drug costs

Health Affairs has some ideas regarding drug costs. 

A few jaw-dropping facts quickly illustrate the pattern of rising drug costs. The average annual cost of cancer drugs increased from roughly $10,000 before 2000 to over $100,000 by 2012, according to a recent study in Mayo Clinic Proceedings. Several breakthrough specialty medications and orphan drugs recently approved by the Food and Drug Administration (FDA) have subsequently entered the pharmaceutical market with hefty price tags. Consider Biogen Idec’s multiple sclerosis drug, Tecfidera, which costs $54,900 per patient per year; hepatitis C cures from Gilead Sciences, with a sticker price of $84,000 per patient; and Orkambi, a cystic fibrosis drug from Vertex Pharmaceuticals approved this month, priced at a whopping $259,000 per year.


generic drug prices have at least managed to raise eyebrows. In 222 generic drug groups, prices increased by 100 percent or more between 2013 and 2014, according to Forbes. As generic drugs have long provided payers some respite from other more expensive products and services, rising prices in generics like Mylan NV’s albuterol sulfate—which increased about 4,000 percent from 2013 to 2014—are well worth the concerns.

And consider this as well.

Pharmaceutical companies and free market proponents were unhappy at the Obama administration’s recent proposal to grant Medicare the authority to negotiate drug prices. A Republican-controlled Congress is unlikely to accept such meddling in private markets, and a lobbying firm in Washington called the proposal “dead on arrival.”

Read the rest of the article for more facts and thoughts on amelioration….or just read some of our old posts

Medicynical Note:  And why anyone in their right mind would oppose Medicare negotiating drug prices is anybody’s guess—my guess is that campaign support (money) from drug companies (in other circles known as bribes) carry the day. 

What’s going on is not sustainable and something has to give.  Drug Companies want everyone but them to literally give $$$$.  Their business is not health care but rather maximizing revenue.  Patient outcomes, access, bankruptcy, sustainability is not their department.  

It IS the money stupid!

Decisions in health care (Electronic Medical Records): It’s the money stupid!

Health affairs blog notes that the decision to implement and fund the electronic medical record was based on faulty research that indicated it would save money.   The premise was wrong.  And the the flaw in the research, in part, was that the research and the decision to fund was influenced by lobbyists paid by vendors of such systems—greasing the wheels so to speak.  This is highly legal, given the Supreme Court’s granting of citizenship to corporations and moneyed interests, allowing them unlimited “access” (ability to bribe)   to whichever political hack who would support their plans.

Long before Congress created the Health Information Technology for Economic and Clinical Health (HITECH) Act, giving $32 billion to health care providers to transfer to Electronic Health Records (EHR) vendors, plans for that windfall were created by an by Health Information Technology (HIT) vendors, HIT enthusiasts, and friendly politicians (like Newt Gingrich).

The plans included an enormous lobbying campaign. Congress responded obediently. Most commentators focus on that $32 billion for the HITECH Act’s incentives and subsidies. But that was only seed money. The real dollars are the trillions providers spent and will spend on the technology and the implementation process.

Much of the economic justification for the spending on HIT was based on a now-debunked RAND study that promised up to a $100 billion in annual savings. Recently, however, in a remarkable act of ethics and honesty, RAND disclosed its previous study’s problems, dubious data, and weak research design, and that the research was subsidized by two of the larger HIT vendors (Cerner and GE).

Interestingly, in contrast, the Congressional Budget Office (CBO) and the Office of the National Coordinator for Health Information Technology (ONC), both of which touted the first RAND study, have not issued reassessments of their happy predictions but continue to promote HIT’s cost savings and improved patient safety. While HIT should be and absolutely is far better than paper records, more than 30,000 studies had already failed to support such bold assertions of powerful improvements in health and efficiency. Moreover, the research designs of all but a tiny proportion of those studies were too weak to yield trustworthy conclusions. And the best of them showed few if any benefits. This comes to the heart of our concern here: the use of weak research in support of less-than-effective health policies and medical treatments.

Medicynical Note:  And yes, there is no shortage of political hacks in our congress.

Skim milk masquerading as cream, again.  Is this any way to run a government? 

Health care/Insurance—We’re the worst

T.R. Reid’s book “The Healing of America” compares our non-system of  health care  with other countries solutions.  In a recent interview he noted:

In coverage, against all the countries like us, we’re the worst. There’s no other country that lets people go without health insurance. Quality on comparative measures…we rank pretty low among the rich countries. We’re better than the poor countries, but compared to Britain, Germany, Japan we rank pretty low on health outcomes. Cost–we’re the highest by far. We pay twice as much per capita  for health care and still leave 31 million people without coverage.


The first thing we need to do is make a moral commitment to cover everybody and we’ve never done that. It doesn’t have to be socialized medicine. Germany covers everybody with private insurance, private doctors and private hospitals and they still spend much less than we do.  We could do it through government, we could do it through private insurance, but you need to commit to cover everybody and once we do that we’ll get it done.

Medicynical Note:  The question is why don’t we formally commit to cover everybody.  We, the government,  already cover all people over 65, those who are disabled, some of the poor, the military and their retirees, government employees—probably half the country.

Meanwhile health care costs spiral.  Drug companies gouge the sick and infirm.  Insurers make certain to get their 20%.  An no-one really really is interested in curbing costs.  It’s amazing what we tolerate. 

The $153,000 Snake Bite and America’s Decline

The paradox of American capitalism is that we say it works best when there is a “free market” with competition.  But as we have seen time and again the goal of business, even in healthcare, is obtain monopoly status (i.e. eliminate competition) for your “product” and then gouge your customers–a great business plan, no?

This was brought home by the Washington Post article reporting a snake bite for which medical costs were $153,000.

The bulk of his hospital bill—$83,000 of it— is due to pharmacy charges. Specifically, charges for the antivenin used to treat the bite. KGTV reports that Fassler depleted the antivenin supplies at two local hospitals during his five-day visit. Nobody expects antivenin to be cheap. But $83,000?

There’s currently only one commercially-available antivenin for treating venomous snakebites in the U.S. — CroFab, manufactured by U.K.-based BTG plc. And with a stable market of 7,000 to 8,000 snakebite victims per year and no competitors, business is pretty good.


BTG has fought aggressively to keep competitors off the market. A competing product, Anavip, just received FDA approval this year and likely won’t be on the market until late 2018. This lack of competition is one reason why snakebite treatments rack up such huge hospital bills — $55,000. $89,000. $143,000. In May of this year, a snakebit Missouri man died after refusing to seek medical care, saying he couldn’t afford the bill.

Excessive costs  are nothing new to anyone with a serious illness.     New cancer drugs for example start at $100,000/year for the drug alone, whether they work or not.  As a matter of fact most don’t work at all for the majority of patients treated with them.

This article was almost immediately followed in my browser by the brief statistical review of the 12 economic signs that the U.S. is on the decline published in Fortune magazine  based on the academic article Is the U.S. Still the best Country in the World? Think Again by Hershey Friedman and Sarah Hertz.  Interestingly the thesis of the article is not that the U.S. has too many regulations but rather that unfettered capitalism really really does not work.

“Capitalism has been amazingly successful,” write Friedman and co-author Sarah Hertz of Empire State College. But it has grown so unfettered, predatory, so exclusionary, it’s become, in effect, crony capitalism. Now places like Qatar and Romania, “countries you wouldn’t expect to be, are doing better than us,” said Friedman.

Read the article for the 12 signs but consider that whether it’s incomes, poverty levels, internet speeds, education, health, or prison population the U.S. lags other countries in the world.  Hardly the position for a world leader.

Medicynical Note:  I would posit that the snakebite anecdote is the concrete example of the second article’s thesis.  Our costs lead the world (yes that is one area we are world leader) and that in turn affects access, quality and yes the economic well being of citizens.  The U.S. continues to lead the world in bankruptcy from health care costs–a category of bankruptcy unknown in other countries.

Even more damning is that patients almost never know the cost of a  health care service AND providers (hospitals and practitioners) have little certainty  as to what they will actually be paid for the service rendered.  And yes adding to the insanity,  people billed directly, those without insurance and least able to pay, are billed more, much more, for the same services.  That’s true predatory capitalism!