The Market Ticker
Commentary on The Capital Markets- Category [Health Reform]

Gee, you think there's a problem here?

Specialists in infectious disease are protesting a gigantic overnight increase in the price of a 62-year-old drug that is the standard of care for treating a life-threatening parasitic infection.

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.

Note that at 62 years old this drug is long off patent.

So what justifies this sort of change?  Nothing, really, other than a hedgie sort of dude buying up these drugs and then jacking the price, basically betting that the drug is in limited-enough use that nobody else will produce another generic equivalent and by controlling distribution they also make it harder to produce a competing generic since you must establish equivalence to get approval for it.

To do that, of course, you need a supply of that to be tested for equivalence.

Why do we allow supply restrictions of this sort to take place when they are intended to constrain market access and, by definition if there are no alternative sources, the party doing it has market power?  That would appear to be a rank violation of 15 USC (Sherman Act.)

Where does it stop folks?  When do you get off your ass and demand that it stop?  Will it before or after you're either broke, dead, or both?

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Those of you who support the government's involvement in health care -- and its refusal to prosecute clear, blatant, in-your-face price-fixing -- have a duty to explain and defend this:

A big concern for Baltimore and other cities is the price of naloxone, which has risen dramatically as demand has gone up. In February, the Baltimore City Health Department was paying about $20 a dose. By July, the price had climbed to nearly $40 a dose.

Oh by the way 10 years ago this drug, naloxone, cost one dollar a dose.

It's gone up in price by a factor of 40, with half of that rise taking place over less than six months.

Or take snake antivenom.  The price of the drug in the hospital is comprised of many things, but the cost of making the drug is only 0.1% of the total charge.  2.1% is the cost of clinical trials to prove the drug works.

The rest -- and the source of the outrageous bills -- is profit of some sort by someone, whether "imposed" via regulatory fiat or simply lining someone's pocket.

This is not nearly-irrefutable evidence of price-fixing and monopolist behavior -- that is, intentional suppression of competition?  Like hell it's not, and I remind you that such acts are supposed to be violations of the law, specifically 15 USC.

Why is it that we don't see drug company executives, along with hospital and other medical executives, looking like this?

Handcuffs by tickerguy

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