"People hate because they think I'm charging people $750 per pill even though it costs patients less than $10 out of their pocket"
No.
People hate because you ARE charging $750 per pill. They may only have to pay $10 out of pocket immediately, but one way or another, through co-pays, deductibles, premiums, opportunity cost when employers pay premiums, patients ARE paying $750 per pill.
I highly doubt Shkreli is stupid enough to think that there's a magic pill-paying fairy conjuring $740/pill out of thin air for his benefit, and patients aren't inconvenienced.
But... he DOES think WE are stupid enough to fall for this.
Maybe we need a charity that builds a research war chest to threaten companies like this with redevelopment. It costs a lot to replicate a pill and go through the FDA hoops, and once a private company does, the price just gets competed down to the point where it doesn't cover the redevelopment costs.
Instead, a charity doesn't have to take profit into consideration and can just threaten: drop your price or we'll persue independent redevelopment. With only the credible threat of spending on independent redevelopment, they could devalue a lot of these orphan drugs, and then buy up the rights/trade secrets to them for open release.
Competing businesses can't do this, because they can't pose a credible threat, because following through wouldn't make business sense. A charity can have non-business aims.
He's taking advantage of government imposed barrier to entry costs. Perhaps by going all out in extracting benefits from the government protection it will point out to the public how much they're being taken advantaged of by the pharmaceutical companies in general and prompt them to demand changes from the authorities. And by tearing down these walls it would benefit his company, because his company is very small startup in the pharmaceutical world. As a startup he doesn't have much incentive to keep the status quo as it is and it is advantageous for him to rock the boat as much as possible. Would he have gotten so much coverage of the inefficient part of the pharmaceutical industry by preaching to the converted, or as he's done and go all out and squeezing it for all he can?
What he thinks is that people are going to be outraged over this and new regulations will drive down the stock price of other pharmaceuticals which he has shorted, and if that fails he will still make some money off the pills.
It's an excellent bet even if it is extremely immoral.
The problem with healthcare in America is insurance. When you are insured and insurance is paying for everything patients don't care how much anything costs. (See Tragedy of the Commons).
And the drug companies charge $250 to $750 a pill or $14,000 for a years worth of drugs (recent cholesterol drugs Repatha and Praluent) to $250,000 (cancer drugs) and the drug companies justify it by saying insurance pays for it anyway. Drug companies are charging Americans 26,000% higher than in other countries (eg: Cuprimine, for which Valeant charges $260 per pill is available for $1 in other countries.)
The net result is that insurance rates are rising rapidly, and even if you have insurance you may not be able to make the copay.
As much as I hate socialism, the only solution appears to be Single Payer.
I think it's funny that people think insurance isn't a (distorted) form of socialism. It's small-scale socialism - you pay into a pool, and those who need resources get it. If you really hated socialism, you wouldn't have any insurance at all.
The problem is not insurance. First of all insurance companies are not that good at shielding patients from costs; most people have deductibles and out of network expenses if they even have insurance at all. Second, even with insurance medical bankruptcy is rampant (the main cause of bankruptcy). Third, insurance companies have an obvious incentive to lower costs, it means they make more profit. They just don't have the power.
This is something that changed in the 90s, when attempts at managed care tried to use insurance companies to push down costs. Hospitals responded by consolidating into local monopolies (provider networks) that insurance could not out bargain.
The problem is simply that providers have too much power. Doctors regulate the supply of their profession; doctors in the US make 2X the oecd average. Pharma companies and medical get patent monopolies; drugs cost $300 billion a year above their generic price. Hospitals have local monopolies and patients don't know how to bargain for cheaper care; MRIs cost thousands of dollars.
Insurance takes home a few paltry percent of every dollar spent on health care. The real takers are the health care providers, but we are all too busy shutting on insurers to notice.
This isn't a story of drug company overreach, it's about how your government has driven the costs of compliance so high that it's not worth making a drug unless you can extract monopoly rent from it.
The drug (pyrimethamine) has been in the public domain for more than 30 years, but in the US the government imposed costs mean that it wasn't (until now) worthwhile for another manufacturer to go through the process of US certification for such a low volume, low margin drug.
You can buy pyrimethamine for $0.10 a tablet in most of the rest of the world, but that's not thanks to the power of socialised medicine. It's because of less onerous government regulation that means you can manufacture your drug for $0.10, comply with regulations and still turn a profit.
This argument is hard to buy when pharma has been turning 20% profits in the US for decades, far and away above any industry. Boohoo, compliance is obviously so onerous for them, wah.
> When you are insured and insurance is paying for everything patients don't care how much anything costs. (See Tragedy of the Commons).
Obamacare is the free market answer.
It encourages HDHP plans which forces the individuals to pay for those pills. Now that consumers are fronting the costs below $1300 or so, they really do care about huge pill costs like this now.
Before, consumers may have not cared. But now, people do care and people will pay attention.
What does this have to do with socialism? How does drug companies charging for an arm and a leg or insurance companies paying for it and raising premiums relate to socialism?
Because single-payer systems have enough bargaining power to get much better deals from drug companies both theoretically and empirically. A few years ago when I was taking a health care policy class and actually looking through the stats, drugs cost ~2X in the US vs G20 averages. Not sure what it is now, but I would be very surprised if it had shrunk.
Others: having one predominant type of insurance nationwide cuts down on administrative costs (figuring out different plans costs consumers and hospitals money, these costs aren't minimized by competition), the cost of 1/sqrt(n) risk, and "bandwagon" risk (if a market plan is particularly advantageous for any given group of people, those people all sign up and "sink the ship," whereas national boundaries largely prevent such movement).
It's all socialized medicine. We all have the same bodies. The only question is whether we get what we pay for. In the US, we don't.
The idea that "insurance" is somehow applicable to a scenario where essentially every participant will need to file multiple expensive claims is extremely silly.
Didn't a competitor introduce a better version of the $750 pill priced at $1? Isn't that proof of free market efficiency working?
Indeed much of the rising insurance costs appear to be government-mandated purchasing of a highly-regulated service, a la affordable care act. That's just elementary economics. The FDA-imposed regulatory hurdles to medical innovation also drive up costs and protect the price gougers from competition.
I probably hate Socialism more than you do but I've come to accept that Single Payer is probably the only thing that allows your population to not to succumb to insane debts for just living.
> As much as I hate socialism, the only solution appears to be Single Payer.
The problem is, "How do we establish a market that provides medication to patients who may not be able to afford it while still generating enough profit to allow research and development of new drugs 10 years from now?"
Establishing a monopsony doesn't actually solve this problem. It changes the flow of money slightly[0], but it doesn't actually solve the fundamental problem: in the aggregate, R&D costs more than patients are able to provide.
Since we're talking about a national scale, we can't use the argument that adding external money to the system - taxpayer funds - would solve the problem, because the two sets - "Patients" and "Taxpayers" - are the same[1]. The funds are still coming from patients, whether they come in the form of insurance premiums or tax withholdings[2].
[0] but a lot less than most people think! Health insurance in the US already is much more like a monopsony than most people realize.
[1] Technically not exactly the same, but close enough that, economically, they can be treated as one.
[2] One might argue that taxes can vary with income. Aside from the fact that insurance premiums already can (and do) explicitly vary with income, this actually already is the current state: patients on private insurance (and especially the ones with very expensive, luxury health plans) already subsidize patients on public insurance. Changing the system so that we collect these subsidies through tax funds doesn't change the problem (though ironically, it does increase the risk that those funds will be diverted to other government budgets).
The R&D costs argument is a diversion. Profit margins for Pharma companies are consistently 3-5x of more competitive industries (e.g. car makers [1], [2]). Health is a failed market full of rentier corporations.
It's hard to argue against them because they are doing good (inventing life saving medicines) but the opportunity cost of money paid out as profits instead of reinvested into research must be huge.
If the US bargained with drug companies on more even footing with other countries, we might not get stuck footing such a disproportionate fraction of the bill (R&D and otherwise).
> Health insurance in the US already is much more like a monopsony than most people realize.
Dead wrong, Medicare part D is hobbled so that the US is not even close to being a half-monopsony, let alone a full monopsony, in the drug market.
> in the aggregate, R&D costs more than patients are able to provide.
R&D is 10-20% of a typical pharma co's budget. Eroom's law says that in the limit you're correct (until we get over the genetic engineering bump), but there's plenty of room to speculate about constant factors. The pharma business is notoriously infested with rent-seeking shenanigans. See: OP.
> If the US bargained with drug companies on more even footing with other countries, we might not get stuck footing such a disproportionate fraction of the bill (R&D and otherwise).
That's an odd way to phrase it, because it implies that the amount of research being done globally is constant. But it isn't; it's driven by the available funds.
This actually proves my point: a disproportionate amount of the research that happens globally happens in the US[0], and that's because there's enough profit in the US market for companies to conduct that research. If that profit is reduced, then yes, it's possible that the short-term prices would decrease, but at the cost of delaying further discoveries and advances in medicine.
That's not an easy tradeoff to make, precisely because it's unclear which choice benefits patients more. It's a much easier choice for a country that has a small population, or for a country that doesn't contribute that much to the global R&D (because the impact would be smaller), but the US is in neither of those two categories.
> Dead wrong, Medicare part D is hobbled so that the US is not even close to being a half-monopsony (let alone a full monopsony) in the drug market.
I'm actually not referring to Medicare Part D with that footnote, but that's a separate discussion.
[0] The US's share has dropped in the last decade or so, but only because China and India have become even more lucrative.
We don't need pharma to pay for R&D. Total pharma R&D on drug development comes to a paltry $26 billion a year. This could easily be paid for by the government. We already have the infrastructure, we just need to fund it.
By definition, it's a market if there are two or more entities exchanging scarce goods or services. Medical care is a scarce good, medical research is a scarce good, and money is a scarce good, so it's a market, no matter how we structure it.
If one (or both) of those parties is a sovereign state, or if we set arbitrary restrictions on the price and/or quantities traded, that doesn't change the fact that it's a market.
Drug costs are ~10% of total healthcare costs in the US. Are drug prices a problem? Yes. Are they the main cause of our outrageous healthcare spending? No.
How does that compare to each other little area of spending? If you have 100+ categories of spending to look at, 10% of the market in a single spending area can be some pretty low hanging fruit.
Spending in physician/nurse compensation is higher than spending in drugs. If reducing the price of drugs to European levels would result in big savings to the system, imagine the effect if the compensation of healthcare professionals was reduced to European levels.
Let's say we reduced US drug prices down to EU levels. Branded drug sales are about 80% of all US drug sales. Reduce that by 25% and we've reduced US healthcare spending by 2%. Decent, but certainly not enough to solve our healthcare spending problem.
Since a new drug came out that's almost the same as your company's for such a cheap price, how do expect to turn a profit now?
[–]martinshkreli[S] 0 points 16 hours ago
no new drug is FDA approved for toxoplasmosis.
[–]LouisDeFeo 1 point 16 hours ago
You're right, excuse me. I meant when it gets approved, how do you expect to turn a profit?
[–]martinshkreli[S] 0 points 16 hours ago
they're not going to do that. they don't have the resources.
and:
[–]strik3three 2 points 16 hours ago
You've said the rise in the cost of Daraprim won't effect most patients because the insurance companies will absorb the cost. Does it not stand to reason though that the insurance companies will pass those cost back along to the policy holders who pay the premiums. How does that argument not perpetuate the problem of out of control medical cost?
[–]martinshkreli[S] -1 points 16 hours ago
It definitely stands to reason. But the other thing to consider is that as more companies generate revenue and profits new companies sprout to compete with them for that profit pool. This keeps costs down.
and:
[–]HomerPepsi 1 point 12 hours ago
Money aside, how do you feel about being hated by the world?
[–]martinshkreli[S] 0 points 5 hours ago
It doesn't bother me. My priority is patients and I have a ton of support from them. I don't answer to the media or random internet crazies.
And the winner (appeal to common practice fallacy):
Shkreli says if he could do things differently, he'd have explained things better instead of being a flippant jackass. But I'm not sure that would have worked: very few people know or care about how the pharmaceutical industry / drug research works. "Pharma bro screws over AIDS patients" just rings too many of the right bells, zeitgeist wise.
I have a hard time believing this isn't all part of some plan. Stock shorting?
I love this as an example of how broken the USA is. Democracies, for better or worse, mean that the government represents the will of the people. Determine 'will' however you want (majority vote, enlightened representatives, reddit poll, &c), and you would find overwhelming support for at least stopping Shkreli from doing this, and probably worse.
What do we get instead? Shkreli will gain a few hundred million dollars from this scheme, and Millennials will complain about him on message boards.
And don't think that the system is broken because corrupt system is unyielding and impenetrable. It's broken because our generation lacks the constitution (and possibly aptitude) to push for the changes necessary. There has never been an easier place and time to than 2015 USA to enact the changes you want to see. But we're content eating fast food and watching Netflix instead.
> It's broken because our generation lacks the constitution (and possibly aptitude) to push for the changes necessary.
If you mean Gen X or Y, that's just wrong. Those two generations basically got Obama elected in 2008 (who got out and canvassed, and ran his Internet campaign and much of his meatspace campaign, and voted), and look what happened: vontinued never-ending war, police brutality on the rise, drug war on the rise, continued mass incarceration and surveillance state, ridiculous Dem/Repub back and forth showmanship, and so forth.
And please don't say we should have picked better in 2008. Who? Clinton? Biden? McCain/Palin? Anyone outside of the two parties has no chance, witness the party Sanders ran under this cycle.
Could it be that we simply see the game is fixed, and simply no longer wish to participate in or implicitly support this system?
> There has never been an easier place and time to than 2015 USA to enact the changes you want to see.
Oh really? Well, such a pliable system sure has proved remarkably impervious to change.
Changes happen in the streets, not the ballot box. The fact that you think real change only takes place by choosing the "right" one of two (largely indistinguishable) major party candidates every four years is part of the problem.
Change is hard. It takes dedication and sacrifice. It takes wit and cunning and luck. But we live in a country where if you go out and try to make those changes, you will not be arrested (for very long) or killed. Your family will not be tortured. In fact, when people do attempt to make changes, our country encourages them. There are very few places in the world where this can be said. And groups dedicated to making changes this way have altered the course of this country. The LGBT community is doing it right now. Racial minorities have done it in the past. Anti-war activists have done it.
But they didn't do it from a place of comfort. It's very hard to make positive changes to society while climbing a corporate ladder.
If you are too scared to disturb the comfort of your current life, and you think the ballot box is all you have control of, then you are the exact type of person I described in my original post. And it's not an insult to you. It's an insult to an entire generation.
He should get his head of R&D (Dr. Eliseo Salinas ) to do a kickstarter to raise money for research into a better toxoplasmosis drug. Either it would be successful and he could do what he says he wants to do, or he would make the point he's trying to make about the fact that fundraising to get a drug all the way through clinical trials to market is expensive and it falls on the backs of sick patients in basically every other case.
Or he would be forced to reveal that he actually is just in this as a common rent-seeker.
Seems completely unapologetic. I'm trying to be shocked, but then, he's apparently still CEO, so clearly the company that employs him can't be that outraged by his behavior.
Despite me not liking what he has done, I can't really find any faults with what he has done. If he purchased the drug legally then why can't he charge as much as he want? Can anyone point me to the law that says he can't do that? I'd be curious to know if he has done anything illegal.
Additionally, I wonder if he is doing this on person to make a point about drug pricing in the USA.
"People hate because they think I'm charging people $750 per pill even though it costs patients less than $10 out of their pocket"
No.
People hate because you ARE charging $750 per pill. They may only have to pay $10 out of pocket immediately, but one way or another, through co-pays, deductibles, premiums, opportunity cost when employers pay premiums, patients ARE paying $750 per pill.
I highly doubt Shkreli is stupid enough to think that there's a magic pill-paying fairy conjuring $740/pill out of thin air for his benefit, and patients aren't inconvenienced.
But... he DOES think WE are stupid enough to fall for this.