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Drug Price Gouging A Product Of Our Political System

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Drug Price Gouging A Product Of Our Political System


If Hollywood had created Martin Shkreli as the monster from Wall Street, we would have accused it of unfair characterization. But Shkreli — a 32-year-old hedge fund director in T-shirts, dabbler in the punk rock music world — has saved Tinseltown the trouble.

Shkreli has also done the American people a service by showing in high def how the pharmaceutical industry gouges us. The pharmaceutical industry is angry with him for the same reason.

Drugmakers prefer a subtler approach. Do it quietly and with a touch more nuance. For example, the day Valeant Pharmaceuticals acquired two heart drugs, it raised the prices for them by only 525 percent and 212 percent.

That was a model of self-control next to Shkreli’s instant 5,455 percent price hike on a 62-year-old lifesaving drug. This wasn’t a good visual for the industry. The audio wasn’t so hot, either.

To recap, Shkreli’s startup company recently bought the marketing rights to Daraprim and proceeded to raise the price from $13.50 a pill to $750 a pill. (It used to cost $1 a pill.) Daraprim is often the last hope for cancer patients and others with weak immune systems suffering from parasitic infections.

Some Shkreli decoders explained that his drug company raised prices to recoup the $55 million it had just spent for the rights to sell Daraprim. Thing is, the $55 million acquisition price for a drug serving a relatively small number of patients seemed justified by the belief that one could raise the per-pill cost more than fiftyfold overnight. You can only get away with that in the United States, but we’re a big, big market.

No other industrialized country lets drugmakers pick prices out of thin air and assume patients, insurers and taxpayers will somehow come up with the ransom. The U.S. setup comes courtesy of our lawmakers in Washington, above all our Republican lawmakers.

In the Valeant case, Sen. Bernie Sanders, a Vermont independent seeking the Democratic presidential nod, demanded documents defending the price increases. Valeant said no, that such information is “highly proprietary and confidential.” Wouldn’t it just.

Governments elsewhere, however far to the left or right, see negotiating drug prices for their people as a duty of leadership. The United States does little of that. In fact, the law establishing the Medicare prescription drug benefit specifically forbids the government to negotiate drug prices.

Let’s talk about markets, OK? We believe in a market system, buyers negotiating prices with sellers, right? U.S. taxpayers fund 73 percent of the Medicare drug benefit. They are the buyers.

But in our skewed political language, Republicans denounce proposals to have the federal government negotiate Medicare drug prices as an attack on our allegedly free-market system. Somehow letting the taxpayers defend their interests is “socialism.”

It is true Medicare beneficiaries obtain drug coverage through private insurers who do negotiate prices. And it is true that, as Republicans say, the Medicare drug program is costing less than originally projected. But this is a shell game.

The relevant comparison is what the drug benefit costs next to what it would have cost had the government been allowed to bargain on prices. Taxpayers could save up to $16 billion a year if Medicare did the negotiating, according to a recent estimate in The Wall Street Journal.

The week Shkreli revealed the creepy reality of drug pricing, Hillary Clinton issued a proposal to curb “profiteering” by the drug industry. Biotech stocks promptly took a hit on Wall Street.

That hedge funder let the cat out, for sure, and it will be screeching right through Halloween. Some boys are so bad they do good.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators Web page at www.creators.com.

Froma Harrop

Froma Harrop’s nationally syndicated column appears in over 150 newspapers. Media Matters ranks her column 20th nationally in total readership and 14th in large newspaper concentration. Harrop has been a guest on PBS, MSNBC, Fox News and the Daily Show with Jon Stewart and is a frequent voice on NPR and talk radio stations in every time zone as well.

A Loeb Award finalist for economic commentary in 2004 and again in 2011, Harrop was also a Scripps Howard Award finalist for commentary in 2010. She has been honored by the National Society of Newspaper Columnists and the New England Associated Press News Executives Association has given her five awards.

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  1. bcarreiro October 1, 2015

    If Americans have to mandated to have insurance then pharmaceutical companies should be regulated to what people can afford…not what they can’t. Some die because of it.

    1. kg_from_hi October 1, 2015

      Because most, if not all of the rest of the world restricts the amount Big Pharma can charge, they (Big Pharma) turns to America. America to the rescue AGAIN. Without us Americans, Big Pharma would have little to no incentive (Big Money) to find drugs that work better, safer, and with less nasty side effects. If only someone could figure out a way to make everyone happy… (as in fairness all around)

      1. RED October 1, 2015

        Hey can I move in to the fantasy world where Big Pharma is making drugs to be “better, safer, and with less nasty side effects?” Cause sadly the world I live in Big Pharma is making drugs for one reason only, PROFIT. And they will lie, cheat, steal, manipulate, whatever it takes to both cover up the negatives and mislead you about the positives. And they regularly sit in corporate board rooms and decide that certain numbers of deaths and suffering is fine provided the profit stolen outweighs the cost of lawsuits. So, with that direct relationship, the more profit they make, the more people they are willing to overlook suffering and death.

  2. The lucky one October 1, 2015

    With other animals if a member of the group starts acting in a way that threatens the safety of the whole group they gang up and kill him, just sayin’.

  3. Daniel Jones October 1, 2015

    The Death Panels are all in the smoke filled rooms..

    Big Pharma, Big Oil, Big Business.. all too big *not* to fail.

    Seriously–fail ’em.

  4. Otto Greif October 1, 2015

    “Gouging” is a nonsensical concept.

    1. JPHALL October 1, 2015

      Were have you been the last 100+ years Van Winkle?

      1. Otto Greif October 2, 2015

        Provide a rational definition of “gouging”.

        1. JPHALL October 6, 2015

          Use a dictionary or Google it yourself.
          Subject: Re: Comment on Drug Price Gouging A Product Of Our Political System

          1. Otto Greif October 6, 2015

            None exists.

          2. JPHALL October 7, 2015

            How much do they pay you to act so stupid?
            Subject: Re: Comment on Drug Price Gouging A Product Of Our Political System

          3. Otto Greif October 8, 2015

            None exists, which is why you can’t provide one.

  5. Otto Greif October 1, 2015

    Valent has been able to raise prices like that because of regulation.

    1. JPHALL October 1, 2015

      You really are that dense! I thought you were only playing.

      1. dtgraham October 1, 2015

        This guy is amazing.

      2. Otto Greif October 2, 2015

        That’s a fact.

        1. dtgraham October 7, 2015

          Then why are pharmaceutical prices lower in western Europe and Canada where government drug price regulation and bulk buying are the norm?

  6. Robert Cruder October 1, 2015

    A drug is worth only it cost of manufacture. The sole right to sell that drug is what allows one to dictate price and is an artificial legal concept. Patent law is sometime also involved but that is also artificial legal concept. The holders of patents, copyrights and licenses act like they are divinely ordained physical property but they are compromises intended to fairly treat both inventor and consumer.

    This extortionist invented nothing but purchased that artificial “right” at a great discount from actual developers. This extortionist displayed no effort and no mechanism toward drug development that he claimed to be funding. True inventors, physicians, patients and the public saw only extortion.

    The FDA and the Federal government depend on a Constitution that mentions “general welfare” and “property” but not “license” or “extortion”. Indeed, the revolution involved British monopolies.

    FDA should open the license to any manufacturer worldwide who has been approved to manufacture any other drug. Residual patent rights feed only trolling, not invention and should be cancelled as well.

    This argues against elements of the TPA that were written by patent and copyright holders. They demand that these artificial rights be enforced worldwide with no recourse and with no admission that they might not always be fairly enforced.

  7. dtgraham October 1, 2015

    This jackhole is trying to take the Canadian government to court for lowering the price of what’s now being called the world’s most expensive drug. They filed a motion in federal court, arguing that Canada’s drug price watchdog has no authority to force the company to first lower it’s price if they want to start the process of bulk buying price negotiations. This is a first in history in Canada. This is going nowhere Martin. Give him credit for basketballs though. He’s serious about his dickishness.


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