By Darren Smith, Weekend Contributor
Following his arrest this week for alleged securities fraud, Turing Pharmaceuticals CEO Martin Shkreli resigned his office.
Turing garnered infamy for the 5000 percent price increase of Daraprim, a $13.50 medication indicated for patients requiring treatment of Toxoplasma gondii–an opportunistic pathogen afflicting the immune-compromised such as AIDS patients. Monthly treatment cost now associated with the drug can be upwards of seventy-five thousand dollars. See previous articles HERE and HERE.
Interim CEO Ron Tiles thanked the 32-year-old for “helping us build Turing Pharmaceuticals into the dynamic research-focused company it is today.”
Turing Pharmaceuticals issued a press release which reads in part:
Zug, Switzerland, December 18, 2015 — Turing Pharmaceuticals AG, a privately-held biopharmaceutical company focused on developing and commercializing innovative treatments for serious diseases and conditions, today announced the resignation of Martin Shkreli from the position of Chief Executive Officer and the appointment of Ron Tilles to the position of Interim Chief Executive Officer.
Mr. Tilles will continue to serve as Chairman of the Board of Directors. He said, “We wish to thank Martin for helping us build Turing Pharmaceuticals into the dynamic research focused company it is today, and wish him the best in his future endeavors. At the same time, I am very excited about the opportunity to guide Turing Pharmaceuticals forward. We remain committed to ensuring that all patients have ready and affordable access to Daraprim and Vecamyl. Research Development on new medications continues to be a priority for the company. With the dynamic leadership of Eliseo Salinas as head of Research and Development and Nancy Retzlaff as head of Commercial Operations, Turing Pharmaceuticals is poised for great success in the coming years.”
I find it interesting that this press release mentioned Daraprim and how it is coupled with all patients having affordable access. It seems rather certain that Turing is responding to the pariah reputation it has earned as a result of the price increases but hedged its bets by focusing on patients and not insurance providers and institutions, which have been under Shkreli made a target of high pricing. It will certainly remain to be seen what happens in practice, especially in light of the cash cow it now can still milk.
Turing will have a serious PR problem to contend with despite the resignation of its flamboyant and extravagant CEO. It could establish some goodwill with some reasonableness.
Depending on single streams of revenue can be problematic, especially when science discovers alternate drug treatment regimes and large insurers update their formularies. There are many forms of justice, my friends.
By Darren Smith
Source:
Deutsche Welle
Turing Pharmaceuticals, Press Release
The views expressed in this posting are the author’s alone and not those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays or art are solely their decision and responsibility.
HaHa LOL
Greece was done in by getting into bed with Goldman Sachs.
LOL Haha. ROTFLMAO!
Most free market people are embarrassed by a-holes like this Albanian. But the commies here and elsewhere are not the least bit embarrassed by the wacky socialists. The wackier the better. Everything should be free. Money is free. We just tax the shit out of the people who produce, and the takers have a free ride. Worked well in Greece. LOL!!
Ralph:
Please read my explanation of some of the drivers behind drug pricing. It is disingenuous to declare a markup based on the ingredients in a drug. Obviously, Turing was entirely in the wrong and overcome with greed.
But you cannot base the cost of the drug on the cost of the ingredients. Do you have any idea what a fermenter costs? Maintaining cell lines? QC testing and challenge testing that goes on for many years in house? Robotic components? Vats? Lab equipment? Heck, a single pipette can set you back at least $500, and each bench comes with about 10 of them. Plus if your QC test discovers contamination in one of the dead legs of your manufacturing equipment, there goes the whole lot down the drain. How much money did you spend on all the drugs that failed to even get to IND stage?
Who cares how much the ingredients in a compound costs. It has very little to do with the final cost of development and production of a drug. A company has to balance its costs, losses from failures, as well as its race to make a profit before the patent runs out, with the price that the market will bear. They can’t get too greedy, or they will be shunned by consumers and investors, as Turing has discovered. Any attempt at legislating against profiteering must take into account the valid costs of manufacturing drugs.
Since your patent could run out before you even complete your FDA trial, you may depend upon exclusivity, which can last as short as 6 months to as long as 7 years. That’s it. That’s your window to make a profit before the generic manufacturers take all your hard work essentially for free and underprice you. So you just spent millions of dollars to discover a new drug, and you’ve got at the most 7 years to make your profits.
http://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm079031.htm
BFM:
I believe there are already laws against profiteering, such as charging $50 for a gallon of water after a natural disaster. I could be wrong, though.
I believe in the free market, according to its modern definition. Almost no one wants zero regulation, with kids playing in asbestos slag heaps. But the regulation has to be fair and reasonable, with a direct benefit.
As long as someone can vote with their feet/dollars, then supply and demand works. However, I support laws that protect against profiteering during natural disasters, such as the above hypothetical example. Laws and regulations can introduce ethics when raw supply and demand does not. But those laws and regulations can of course be abusive, dreamed up by bored or vindictive bureaucrats, as there are many examples. (You are to recall that hilarious story I posted about the camp ground operator fined thousands of dollars for filling in a hole left when a pine tree fell over.)
Modern capitalism is not lawless anarchy or completely free of regulation.
Also, we already fund millions of dollars in grants. Government funded R&D is tempting, but it’s truly insane how much it costs to get a single drug through the FDA. If the government did all R&D for free, and the results were free to any company to produce, it is staggering the cost to the American taxpayer. We have so many hands out, how do we choose? Are the poor getting enough support? What about the broken foster care system failing to turn out healthy, well adjusted kids? Drug abuse problems? Economy? Roads and bridges? How do we tack on trillions of dollars in free R&D? And how would the government choose which products? Right now, one of the flaws in our system is there is not enough money in orphan disorders (relatively rare disorders) to justify R&D into treatments and cures. Speaking of which, the last I checked, we have not cured very many diseases. We still haven’t cured cancer, MS, Alzheimers (although I just read a really exciting new study on a possible treatment). We chase symptoms.
I strongly dislike government encroachment into private industry. That is not its job. Its job is infrastructure and national defense. It’s supposed to be working quietly and efficiently (cough) in the background while people go on about their daily lives. Once government starts socializing industry, it is very difficult to draw that trend back. And we’ve already experimented with various forms of socialism. It’s always failed. Even the relatively benign “nanny state” socialism has its drawbacks. For one, it requires astronomical taxation, as well as Draconian limits to immigration. If you are going to invest that much money per person, regardless of their contribution to society, then you have to severely limit immigration. You just won’t have the money to support large rates of immigration.
I am certainly open to reforming or overhauling our current health care system. At one point, health insurance was the big innovation. Let’s think to of the box on what the next leap will be. But I will never support our bloated, inefficient, uncaring, unaccountable government inserting itself into a single payer system. I’ve written at length about the very real damage the ACA did to me and my family. You do not reward that kind of fraud and negligence with more power.
Have you ever noticed that whenever someone mentions negotiated drug prices, the pharmaceutical companies cry out that they will have to cut back on research? They never talk about cutting back on commercials.
(many of them now spend more on marketing than research anyway)
Martin Shkreli, the latest poster child for corporate greed, is, as several intelligent people have noted, a sideshow and a distraction from what is really going on in the health care industry in the USA. In fact, the REAL fraudsters in the health care industry — the unholy alliance of Big Pharma and the US Government — are continuing with their fraud and corruption unabated. If not for their fraud and corruption, and their relentless assault on free markets, the cost of pharmaceuticals would plunge dramatically. The following pharmaceuticals make Shkreli and his alleged 5,000% markup look like chump change:
Celebrex 100 mg Consumer price (100 tablets): $130.27 Cost of general active ingredients: $0.60 Percent markup: 21,712%
Claritin 10 mg Consumer Price (100 tablets): $215.17 Cost of general active ingredients: $0.71 Percent markup: 30,306%
Norvasec 10 mg Consumer price (100 tablets): $188.29 Cost of general active ingredients: $0.14 Percent markup: 134,493%
Prevacid 30 mg Consumer price (100 tablets): $44.77 Cost of general active ingredients: $1.01 Percent markup: 34,136%
Prilosec 20 mg Consumer price (100 tablets): $360.97 Cost of general active ingredients $0.52 Percent markup: 69,417%
Prozac 20 mg Consumer price (100 tablets) : $247.47 Cost of general active ingredients: $0.11 Percent markup: 224,973%
Tenormin 50 mg Consumer price (100 tablets): $104.47 Cost of general active ingredients: $0.13 Percent markup: 80,362%
Vasotec 10 mg Consumer price (100 tablets): $102.37 Cost of general active ingredients: $0.20 Percent markup: 51,185%
Xanax 1 mg Consumer price (100 tablets) : $136.79 Cost of general active ingredients: $0.024 Percent markup: 569,958%
Zoloft 50 mg Consumer price: $206.87 Cost of general active ingredients: $1.75 Percent markup: 11,821%
Two quick items.
First, there is no such thing as a free market. Unregulated markets last for about a year until the balance of power shifts, usually onto the side of the producers, wherein they immediately begin to take advantage of their power. They manipulate laws and lawmakers, as we have seen here in the US. They manipulate the rules and the courts, also as we have seen here. And then they manipulate access to information, which is happening right now in the US. Were they unregulated in any sense, they would completely dismantle any oversight (consumer protection agencies, such as they are), any right to sue (tort reform!), rights of access to information, and of course, competition.
The best free market is a regulated free market, because in the best marketplace, both parties have equal power, equal access to information, equal access to other buyers/sellers. The best free market is like a football game: there is a good set of rules, the teams are evenly matched, the refs are independent, and everything is above board and obvious to everyone—imagine a football game or a league with no rules or enforcement. It would quickly become a disastrous joke.
Secondly, healthcare markets are nothing like normal consumer markets. No one buys cancer treatment the way they buy a TV. There is a huge information asymmetry in healthcare, regardless of the Internet, and you cannot go in and demand cancer treatment the way you can demand to purchase a TV from a store if you have the money. A doctor must approve your “purchase”, at least legally.
You may or may not have alternatives venues in which to buy–one small town I worked in had two orthopedic practices, and if you had ever been to one, the other would refuse to see you. No matter what. And most people “consume” healthcare is a state of disadvantage, having become injured or sick.
Wikipedia has a pretty good summary of healthcare economics if you are unfamiliar with the subject. A quick read will tell you that theses are not remotely the same thing:
https://en.wikipedia.org/wiki/Health_economics
Sorry Oily; not reading for comprehension today. It was of course Isaac etc. So Isaac, read my comment!
UHC is NOT pulling out of the ACA because they are losing money. They are doing it for political reasons. They are having one of their best years ever. Income statement for the current running year:
Period Ending Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014
Total Revenue 41,489,000 36,263,000 35,756,000 33,433,000
Cost of Revenue 25,618,000 26,026,000 25,689,000 23,434,000
Gross Profit 15,871,000 10,237,000 10,067,000 9,999,000
Net Income From Continuing Ops 1,618,000 1,585,000 1,413,000 1,510,000
(source: Yahoo finance)
If they are mad about anything it’s that they did not make AS MUCH money as they thought, because they expected a lot more healthy young people to sign up.
Medicare has no 20% profit margin tacked on top of it, and without members of Congress trying to kill it at every turn, could be run quite efficiently and effectively. Other countries manage to do it very well. Or is someone saying Americans just aren’t able to do anything right any more?
At least one insurer….I think it’s United Healthcare…..is pulling out of Obamacare due to steep losses.
One other insurer is likely to follow.
With c. 50% of health care spending under government programs……Medicare and Medicaid…..I don’t know how much savings can actually be realized by putting the other 50% under a single payer system.
I have also noted in the past that the government uses about a dozen or so PRIVATE insurance companies to administer Medicare, and possibly Medicaid.
I have been involved in this discussion/debate before. The savings that a single payer system might produce would barely make a dent in overall U.S. health care costs.
There is also an ongoing debate about the actual difference between administrative costs of Medicare/Medicaid and private insurers. For example, the costs of collecting premiums…….payroll taxes, Part B coverage, etc. is not calculated in Medicare expenses.
Medicare does not have 24 hour access to nurses, which many insurers provide. This is counted as an extra “administrative expense”.
Theorically, there may be some minor savings from a single payer system. But the efficiency of a single payer system is questionable.
Compliance with byzatine Medicare regulations adds expenses to the cost of doing business for health care providers.
The IRS is essentially a government run single payer system, but its efficiency is very questionable. And there are billions of hours, and billions of dollars,spent by citizens/ businesses trying to figure out and comply with an incredibly convoluted and complex tax code.
“The savings that a single payer system might produce would barely make a dent in overall U.S. health care costs.”
Well, maybe not. It would be interesting to see your numbers.
Ed Weisbart over at AMA Journal of Ethics “A Single-Payer System Would Reduce U.S. Health Care Costs” thinks ACA is only the start and that we to move in the direction of single payer. I think it is worth noting that most every western nation has national health care, pays less than half of what we pay per person, and gets as good or better results.
“Today’s fragmented system is akin to requiring each household in a community to anticipate their needs for the coming year and negotiate their own fees and scope of services with the local police and fire departments. Imagine instead how much of their budgets these life-saving community services would be obliged to devote to marketing to and negotiating with each household and the rampant disparities in service that would result. That is precisely what is happening today in health care, and it is absurdly wasteful. For police and fire departments, we have recognized that it is significantly less wasteful to give all citizens the same “coverage” for set prices and to administer it with regional coordination. Global budgeting is the only sensible strategy for such unpredictable yet universally needed services. …
Conclusion … The ACA has begun the process of much needed change. Now we need to go further in reforming health care finance to enable all Americans to achieve their fundamental human right to comprehensive coverage. The rest of the modern world has run the laboratory studies for us; now is the time for us to adopt this well proven solution.”
Potus candidate Trump was viewing Shkereli as running maye, b/c the B$ceos gititdone!
I meant to add some more information behind the pricing of pharmaceuticals, when it’s done correctly.
In order to get an investigational new drug to market, a pharmaceutical company has to spend years at the lab bench in R&D. The vast majority of INDs fail before ever getting to the FDA. That means years of wasted efforts, and then years of team efforts in the hopes that their product will work, and be safe. And then, it takes 10 years and millions of dollars to get it through the FDA. That is why they depend upon patents. Otherwise, generic manufacturers would get all their R&D and drug trials done for free. All they would have to do is copy the formula and scale up production.
So the price of a drug is not the cost of manufacture. It’s the cost of manufacture, the cost of all the failures that came before it, the cost of its development and clinical trial, and then they have to factor in making enough profit before that patent runs out and the generics take it away.
I do think there are many areas that can be improved in this process, that can benefit us as consumers. Clearly Turing illustrates that there is plenty of room for abuse. Also, there are no FDA trials on natural products, because you can’t patent green tea extract. It’s pointless to spend all the years and money on a product when all of your competitors will take your data and carry on. But that means that natural supplement producers cannot make medical claims, and there is not a lot of data on contraindications and side effects.
I would like to see some thinking out of the box to get more clinical data on natural supplements, but that will be impossible as long as it takes Fort Knox to get anything through the FDA. The closest thing is the “generally recognized as safe” exemption for food additives but that does not produce the data that consumers want.
“So the price of a drug is not the cost of manufacture. It’s the cost of manufacture, the cost of all the failures that came before it, the cost of its development and clinical trial, and then they have to factor in making enough profit before that patent runs out and the generics take it away. ”
Of course all that is irrelevant to the free market boys who think the price ought to be what ever the traffic will bear.
Are your children crying from thirst? What is glass of potable water worth to you? Are you in chronic, excruciating pain? What are 24 pain free hours worth to you? Dying from cancer? What is another 6 months of life worth to you?
The free market boys make the stickup boys look like philanthropists. The stickup boys only want your Northface, your Air Jordan’s, your iphone, your watch, and what is in your wallet.
And when you talk about the legitimate cost of developing drugs, there is no reason we couldn’t fund research through grants to universities and private companies where test results would be a matter of public record and any company could produce the safe, effective, public access drug. There would be many details to specify in such a system. But there is no inherent reason that such a system could not efficiently produce safe, effective drugs.
The problems with implementing such a system are political in that it would tend to reduce costs by removing the excess profits from big pharma.
There are many toxins in pharmaceutical concoctions.
This is health care and preventative care. People from birth on up need to be evaluated by a UCS chiropractor. That can prevent, lesson or eliminate symptoms. That type will not twist or Pop anything. Upper cervical specific. X rays of the neck from varying angles must be taken. Base posterior under the chin is the most important one. Adjustment is quick on one side of the neck or slow repeated movements according to X rays. Post X rays are not needed when the body symmetry is measured and when the Tytron infrared scanner is used. Upcspine practitioners, Upper cervical heath centers zip code. NUCCA and Grostic are the slow repeated movements. Birth itself can cause all kinds of symptoms immediately or show up later in life. Atlas needs to be in a neutral position under the opening at the base of the skull. . Don’t go to see one the day you have a fall or some mishap or strike to the head. Wait 4– 5 days. It takes a while for internal changes to show up externally. People who head the ball in soccer will shift that top bone not even knowing it. Stephen Duff, Windsor California and Richard Duff, San Francisco California, are excellent UCS precision DC chiropractic practitioners.
Medicare is single payer. Works great.
Issac nails it.
Hilde,
That is not my quote.
Karen S: Thank you for bringing those issues to bear. This dog is directing his half blind human pal to move to Europe.
And to clarify, the argument regarding regulation is that it should be sensible and have a clear benefit. Not every regulation is a good one, clearly, as was illustrated in NYC with the regulation against bagel crumbs on cutting boards.
Demanding that regulations be reviewed for efficiency, benefit, and basic common sense is not an argument against all regulation. Give a bureaucrat ultimate power and he’ll regulate how many toilet paper squares you use, and which thickness.
It is true that Turing is a development rather than a research based company. They market drugs that others discovered.
What Shkreli has accomplished is to turn his company’s name to mud, and to drive business to less expensive alternatives to Daraprim, as well as inspire regulations against price gouging.
The difficulty with pharmaceutical drugs is that in order to create an alternative, you either have to wait for the patent to run out to manufacture generics, or you have to spend millions of dollars and 10 years to push an investigational new drug through the FDA. And that’s after the years in the R&D lab, and all the failures, to even get that IND. That can make competition not as agile and responsive as in other industries.
But anyone who thinks that a single payor system would cut waste is clearly not acquainted with our broken government procurement system, in which we consistently overpay for contracts that under deliver, with no accountability. Don’t like it? Where are you going to go? Where can you vote with your feet or your dollars if it’s single payor? We’ve already experimented with single payor. It’s called the VA system. The one where our treasured vets died while waiting in line while unaccountable bureaucrats defrauded the system to make themselves look good. They’re still working for us, by the way. No one got fired or went to jail, except we Gen Shinseki retired. And that’s thanks to our government unions, which make it very difficult to fire the bad seeds, even when they kill people through negligence and fraud.
Oh, you “praise god and pass the ammunition.” You can skip over the constitution.
When the rivers flood they know few boundaries. Human made levees can alter the damage done by flood water. In a capitalistic nationstate the state can make levees around certain towns and let the countryside flood. Same with pharmaceutical products. Build a levee around the Shekel company here and only let him sell a certain pill even if it is common like aspirin. The geese will flock to the pill purveyor.
Fleece your flock and all that.
“In a capitalistic nationstate the state can make levees around certain towns and let the countryside flood. Same with pharmaceutical products. ”
What a surprise. I though you were a free market guy and you were a pro regulation guy all along.
Of course we know that too much regulation can reduce economic efficiency. That is why regulation is a political question that requires an artful hand.
We call it economic inefficiency but that is a misnomer. Regulating the food industry raises costs. But that is the price we pay for safe food. Regulating medical devices raises prices. But that is the price we pay for save, effective medical equipment.
If you think regulation is expensive, try living without it. If you think regulation restricts you freedom, try medical treatment from an unregulated doctor, suing for medical malpractice with an unregulated attorney, flying on an unregulated airline, driving to work in your unregulated car or retiring on you unregulated 401K.