So the new maker old off-patent drug that is needed badly but only by a few people, and for some reason isn’t in the Part D or most other private formularies “notices” that it has a monopoly. So what does it do? It puts the price up nearly ten fold . (The drug is called Mustargen and the company is called Ovation Pharmaceuticals). And of course this behavior is matched by other companies that have monopolies bestowed by patents.
Presumably if the market price is that high on the non-patented drug some smart Indian generic will start making it and bring the price down, but that’ll take a little while. And in the meantime 5,000 patients are getting screwed to the wall.
We should have a rational debate about whether there ought to be coverage for certain drugs (and in the UK for instance there is such a debate). But if there’s an egregious monopoly or market-distortion like this, then we know the solution, and it’s called monopsony — or, if you like, price-fixing. Of course this nation’s government doesn’t like to intervene in these types of cases even when it means a bunch of crooks steal blindly from a whole state and help push its economy (and by consequence that of the whole nation) into recession. And I suspect the people who need this drug view Ovation Pharma as Enron wearing lab coats.
But eventually if Pharma (both big and small) continues to abuse its monopoly power, there will be a predictable response. You can argue that making hay while the sun shines is Pharma’s best financial course (if not exactly its best ethical one), but I suspect that whoever sits in the C suites in New Jersey (and South San Francisco) and has to pick up the pieces under the next Democratic Administration may wish that a little restraint had been shown while that sun was shining.
Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, and material assets held by America’s richest 1%. Even that filthy pig Oprah acknowledged that it was at about 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING HYPOCRITE SLOB. THE RICHEST 1% HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for all of their ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. At any given time, there is a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars. Transfered FROM US TO THEM. Over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They will never settle for a reasonable share of ANYTHING. They will do whatever it takes to get even richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductable crumbs and call themselves ‘humanitarians’. IT CAN’T WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. Crime, poverty, and suicide will skyrocket. So don’t fall for all of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductable contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah, Ellen, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. WAKE UP PEOPLE. The 1% club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Vioxx. Their idea. Sub-prime. Their idea. NAFTA. Their idea. Outsourcing. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. Subliminal advertising. Their idea. The MASSIVE campaign to turn every American into a brainwashed credit card, pharmaceutical, love-sick, celebrity junkie. Their idea. All of which concentrate the world’s wealth and resources and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, and executives. IT MAKES THEM RICHER. So don’t fall for their ‘ good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTABLE PR CRAP. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, and Bill are not part of the solution. They are part of the problem. EXTREME WEALTH HAS MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its cause. WE ARE IN BIG TROUBLE.
Yes. No. Yes. What we mean by “professional” seems to be in flux, and I do not know how it will turn out. The obligation of a professional will depend on the answer to your previous question, and also upon on his role.
Would you also defend the business sense of the markets that profiteered on batteries and water after the LA earthquake?
Or the fisherman, smuggling Jews out of Germany, saying “give me all your money and jewels, or I turn the lights on”?
When life itself is at risk, is any amount excessive?
Are professionals nothing but businessmen? Have they no obligation but to maximize profit?
> whoever sits in the C suites in New Jersey (and South
> San Francisco) and has to pick up the pieces under the
> next Democratic Administration may wish that a little
> restraint had been shown
Naaaah. Those in today’s C-suites now will take their sunny-day performance bonuses and run when the weather turns stormy, and the new tenants will work under a set of stormy weather expectations, and they’ll probably have different skill-sets. Either way, the stockholders get the best performance they can under the current conditions, and if they think they can do better elsewhere they’ll get out and invest in something else. All this is presumably factored-in to today’s stock prices anyway.
You can also argue that making hay while the sun shines is Pharma’s only ethical choice. The use of monopoly power, especially monopoly power created by the government, is not abuse; it is expected. There are abuses of the patent system to be sure, but the pricing issue isn’t one of them.
> After years of defending high prices as necessary to
> cover the cost of research or production, industry
> executives increasingly point to the intrinsic value
> of their medicines as justification for prices.
The only justification of the price of anything is its intrinsic value, and for as long as I have been paying attention, pharma has made both arguments. Which argument they use depends on whom they address: when addressing investors they say things like “This device will turn a two week hospital stay into a two day stay, and at $500/day avoided, that means each device is worth $6,000 before we factor-in lost time at work, better risk profile, or any of that. It is really worth $10,000 at least.” Then they try to get $10,000 for the device. When they talk to regulators they say “This device is way better for patients and it takes lots of money to invent and market them, plus you promise inventors patent protection, so leave us alone.”
In both cases they are right. A similar argument goes for drugs and chronic conditions. If we discover that a QALY is worth $75K and there is some drug that provides 90% of .9 QALY, it seems that drug is worth $61K every year, and the medical supervision associated with it is worth $6,700. If a small number of manufacturers make it under Cournot or Stackelberg Quantity Competition, we can predict the price will be less than $61K. Assuming the buyers have no market power, maybe this turns out to be $51K. So even with this very limited competition, patients are better off by (say) $10K/year than they would be under a pure monopoly. Assuming $51K is above the long term average cost of manufacture for both firms, an equilibrium will be found. If free-enterprise is a value, I don’t see how we can claim any injustice in this outcome.
A little aside: What the oncologists are accused of doing is keeping the $10K for themselves, as the gatekeepers so-to-speak for the drugs, plus the $6,750. Actually, they are accused of worse than this. If patients (or their agents) dealt directly with the pharmas, this couldn’t happen, and the $10K would flow to the patients, not to the oncologists.
As Matthew says, an answer to monopoly or duopoly (or any oligopoly) is monopsony, and the price could theoretically be driven below the long-term-average-cost of manufacture. One could imagine a political motive for doing so: “I’m not going to be in office in eight years, so I’ll be a hero today and let my successor clean up the mess later. If he can.” Sorta like some CEOs are accused of doing.
I think ire is raised because the value to patients that flows from drugs & devices gets “concentrated”. For example, you have only two competing for the $61K, but several oncologists comepting for the $6,750 associated with any goven patient — so that component of value gets competed-away, but only $10K of the $61K gets competed away. So the docs & general public see the drug & device manufacturers doing very well, and fallen human nature being what it is, they react, and they are not necessarily rational about it. Which brings us back `round to the top…