Some Background
Before reading Charles Hugh-Smith's commentary on health care below, read the NY Times article Drug Goes From $13.50 a Tablet to $750, Overnight. The outrage inspired by the NY Times article prompted Turing's CEO to have a change of heart about the wisdom of drastically raising the price its anti-toxo drug. Also read, ZeroHedge's Following Public Fury, Jim Cramer-Trained CEO Who Raised Price Of Drug By 5000%, Agrees To Lower The Price.
The Reuter's article, Exclusive: Americans overpaying hugely for cancer drugs – study looks at why drug companies charge so much more in the U.S. than elsewhere. The answer may simply be that they can. ~ Ilene
Drug Goes From $13.50 a Tablet to $750, Overnight
By 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.
Daraprim is used to treat toxoplasmosis which infects pregnant women and causes damage to their fetuses. Toxoplasmosis is also an opportunisitic pathogen that can cause severe infections in immunocompromised patients.
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.
Other companies have similarly acquired drugs and quickly hiked up their prices. These spectacular price increases have drawn attention from senator Bernie Sanders and Rep. Elijah E. Cummings, various medical associations, and now Hilary Clinton.
In August, two members of Congress investigating generic drug price increases wrote to Valeant Pharmaceuticals after that company acquired two heart drugs, Isuprel and Nitropress, from Marathon Pharmaceuticals and promptly raised their prices by 525 percent and 212 percent respectively. Marathon had acquired the drugs from another company in 2013 and had quintupled their prices, according to the lawmakers, Senator Bernie Sanders, the Vermont independent who is seeking the Democratic nomination for president, and Representative Elijah E. Cummings, Democrat of Maryland.
Doxycycline, an antibiotic, went from $20 a bottle in October 2013 to $1,849 by April 2014, according to the two lawmakers.
The Infectious Diseases Society of America and the HIV Medicine Association sent a joint letter to Turing earlier this month calling the price increase for Daraprim “unjustifiable for the medically vulnerable patient population” and “unsustainable for the health care system.”…
Martin Shkreli, 32-year old hedge fund manager, is Turing's CEO and founder. According to Shkreli, Daraprim is used so rarely that it will have little effect on the health care system. And Turing will use the money for developing better drugs. Shkreli's excuse explanation might be more believable if not for allegations of prior profit-driven behavior that have already gotten him into trouble.
“This is still one of the smallest pharmaceutical products in the world,” he said. “It really doesn’t make sense to get any criticism for this.”
This is not the first time the 32-year-old Mr. Shkreli, who has a reputation for both brilliance and brashness, has been the center of controversy. He started MSMB Capital, a hedge fund company, in his 20s and drew attention for urging the Food and Drug Administration not to approve certain drugs made by companies whose stock he was shorting.
In 2011, Mr. Shkreli started Retrophin, which also acquired old neglected drugs and sharply raised their prices. Retrophin’s board fired Mr. Shkreli a year ago. Last month, it filed a complaint in Federal District Court in Manhattan, accusing him of using Retrophin as a personal piggy bank to pay back angry investors in his hedge fund.
Mr. Shkreli has denied the accusations. He has filed for arbitration against his old company, which he says owes him at least $25 million in severance. “They are sort of concocting this wild and crazy and unlikely story to swindle me out of the money,” he said.
The New Shackle Of Serfdom: Clinging To Healthcare Insurance
Courtesy of Charles Hugh-Smith, Of Two Minds
What warlord wouldn't jump on the opportunity to jack up the cost of a medication from $13.50 a tablet to $750 overnight, or as the article highlights, jack up the cost of an off-patent med from $1 a pill to $750 a pill in a few years?
This piratical pillaging is not an outlier–it's the norm in America's parasitic pharmaceutical industry:
Cycloserine, a drug used to treat dangerous multidrug-resistant tuberculosis, was just increased in price to $10,800 for 30 pills from $500 after its acquisition by Rodelis Therapeutics.
Imagine getting to jack your weekly wage from $500/week to $10,800/week.
These profiteering prices are not the shackle of serfdom, at least not directly; few pay these prices in cash–insurers pay. And when prices rise, insurers hike up their rates accordingly (plus a bit to cover their costly political lobbying and the profit margins expected of quasi-monopolies).
Healthcare insurance is the new shackle of serfdom: Americans are forced to cling to whatever coverage they have, lest they lose coverage and risk bankruptcy.
Low-income Americans theoretically don't have to worry, as their medical care is covered by Medicaid. They only need to find doctors and clinics that accept Medicaid. (Good luck with that….) Retired Americans only have to scrape up the few hundred bucks for Medicare Parts A, B, C, D, and of course E through Z. (Perhaps another time we will talk about insane levels of complexity in the system.)
Modern capitalism has one necessary dynamic: the mobility of labor and capital. Financial capital is entirely mobile now; a click of a mouse button is all that's needed to send capital almost anywhere.
What happens to labor mobility when no one dares quit because that would mean losing their medicare coverage? Yes, I can already hear the obvious response: the new employer will provide the same coverage. But not so fast…
Oh really? What if the new employer is the worker himself? What if the new employer is too under-funded to afford America's insanely costly healthcare?
And please don't offer ObamaCare as the "solution": in high-cost regions such as the left and right coasts, any household with a moderately middle-class income doesn't qualify for ObamaCare subsidies.
Please explain the wisdom of shackling employers to employees' medical insurance, and employees to these employers. You can't, because there is no wisdom in this insanity. The system is not the result of planning or coherence–it's simply the result of a jumbled series of historical accidents.
Yet this is the system we cling to. Why? 1) We have no choice or 2) it's so insanely profitable for those at the top.
Is shackling our workforce to their current employer simply to avoid the risk of not having insurance and not qualifying for subsidies good for the economy? No.
This system makes no sense. There are only one way out of this insanity: break the shackles from employer to employees' healthcare insurance and from employees to employer.
There are only two ways this can be done:
1. Offer everyone universal healthcare coverage via a government agency
2. Go back to a cash-only system. The "Impossible" Healthcare Solution: Go Back to Cash (July 29, 2009)
Guess how many pills the pirate would sell for $750 each if insurers were eliminated and cash payments by patients were the only form of payment? Near-zero. The parasitic pirate would either have to drop the price back to $13.50 (or better yet, $1) or go broke and have to sell the rights, or be accosted by those who'd lost loved ones to his rapacious greed.
