Comments on: Congressional Hearing Attacks Price Gouging

By: leigh

leigh — Wed, 08 Sep 2010 10:32:30 +0000

It has been a while since that last post was submitted. It is now September 2010. I wonder how Jeff Aronin is sleeping these days. So much sorrow surrounds the drugs he and his companies produce for our most vunerable, our children. Drugs that he knows, are harmful, addicting, dangerous. Drugs that he is able to produce, which are listed as illegal for everyone else! Shame of Jeff Aronin and others of his ilk. He/they are no better than the corner drug pusher, no actually they are worse! They hide behind a veil of respectability even as they push “medications” like Desoxyn on those too young to just say NO. And they have the gall to sell their “medicines” at 1000% more than the same cost two years prior! How dare they market this way to frightened trusting parents who are only trying to do the best they can for their children! Yes. He is far worse than the corner drug pusher, far more dangerous! I wonder how he sleeps at all! I wonder if he hears the wail of our babies with their cracked “meth mouths exposing decayed teeth caused by his prescription for ADHD, and weightloss, and narcolepsy…methamphetimines the bain of our existence in 2010. How does he have the gall to announce proudly that his new companies are researching medicines to manage the addiction his first issues cause?? How does someone live with that? How does he face the families of premature infants whose medicines were recalled due to improper production? Rushing to make a profit causes our young and our old to suffer needlessly. All the while, I wonder if he is laughing all the way to the bank! Time is his enemy, I just hope we can survive until he is found out.

By: lillian

lillian — Sat, 13 Dec 2008 16:34:33 +0000

I HAVE BEEN ON DESOXYN [METHAMPHETAMINE] SINCE 1980.THE PRICE HAS FLUCTATED OVER THE YEARS, THE DRUG HAS EVEN GONE GENERIC FOR 8 MONTHS. ABBOT WAS THE MANUFACTURER. I AM STILL TRYING TO FIND OUT IF THEY STILL MANUFcture THE DRUG OR SOLD EVERYTHING TO OVATION. IN THE PAST 2 YEARS I HAVE SEEN DESOXYN GO FROM $240. a month to the present $409. a month. I CANNOT GET A REASONABLE EXPLANATION FROM OVATION. BY THE WAY I HAVE NARCOLEPSY AND CANNOT DO WITHOUT THIS DRUG. PLEASE FIND OUT ANYTHING YOU CAN FOR ME.

By: CMC guy

CMC guy — Sat, 26 Jul 2008 05:22:39 +0000

Bob I am not clear on point you are attempting to make. Yes price little direct correlation to COGs and agree major spend comes in D not R. Even with the stated operating model (vs doing all in-house R) pharma companies must pay a heavy premium to Unies, Nichers, and Bios to access their projects/technologies. Even with the R Failures risk more spread out there is no solid predictors of D then marketed/commercial success. Any way you cut it drug discovery and development is expensive and demands of increasing “shareholder value” as a constant pace conflicts with time frames R&D requires.

It’s good that Teva (plus a few other Generics Co) are now reinvesting profits gained by “templating” others successful R&D (+Approval & Marketing) and personally wish they can provide new treatments. Side with Nathan & Jack2 as to earlier points IMO international price controls has created unbalance where US now pays more than fair share for supporting drug R&D because free market allows this. Most other countries do not have significant Generics penetration because the price controls weakens incentives.

By: Bob Freeman

Bob Freeman — Sat, 26 Jul 2008 03:23:13 +0000

Lisa, to your point, there is little correlation between costs of goods and ex-factory price. Pricing is generally set close to that of other drugs or services. With no competition, monopoly prices will prevail in the short-term. Very few sectors do cost-plus pricing. There are occasions where generic drugs will be priced as though they were patented: a company can find itself as the sole producer and price opportunistically or, in a less desirable case, tie up ingredients’ supply and become a sole producer.

I have no unique knowledge of Questor so you should take these as generalizations.

Jack2, your comments about Teva are accurate; however, the operating model of major pharmas is now based on leveraging risk by forming alliances with universities, niche pharmas and biotechs. The real spend nowdays is developemntal not basic research.

By: Jack2

Jack2 — Sat, 26 Jul 2008 02:56:45 +0000

Oh and I agree with Nathan…

I don’t believe in price controls anywhere. And price controls aside, isn’t this an off-patent medication (way off patent). Am I missing something there?

By: Jack2

Jack2 — Sat, 26 Jul 2008 02:38:30 +0000

The size of Teva’s move into R&D would be an insignficant drop in the bucket of a major pharma. Plus, Teva’s not doing R&D to develop a drug and then compete with other generic manufacturers. They’re doing R&D expecting patent exclusivity and the higher profits that can bring, to justify the R&D risk.

By: Lisa Emrich

Lisa Emrich — Sat, 26 Jul 2008 02:38:27 +0000

How about bringing this discussion back to the subject at hand - price gouging in specialty markets.

Examine the numbers of Questcor, a company which was actually singled out in the JEC hearing for the first six months of 2008.

Net Sales: $44.0M
Cost of Sales: $3.5M (8.0%)
R & D: $5.5M (12.5%)

Cost of Sales includes 4% royalty fees

Does that seem like the typical high cost of doing business?

By: Bob Freeman

Bob Freeman — Sat, 26 Jul 2008 01:50:31 +0000

Given the expansion into R & D by many generic houses (Teva, Ranbaxy, etc) that argument doesn’t hold. The key is for a generic manufacturer to be successful on a fairly consistent way in securing the 180-day exclusivity across many products. Only after the exclusivity period expires do generics prices drop to commodity levels.

To another point, price discrimination among country markets is necessary both from a company’s sustainability and for increasing social welfare. So, I’m not arguing at all for price/reimbursement controls nor do I endorse a single global or even regional price.

By: Nathan

Nathan — Fri, 25 Jul 2008 23:21:47 +0000

Bob writes: “one of their little secrets is that ex-US affiliates are (with exceptions, of course) profitable.”

But remember, being profitable in the traditional sense means simply selling for more than it costs you to make. In the pharma industry, you should know that if we just sell for slightly more than costs-of-goods, then we cannot fund future development. 30 cents on every doller sold is sunk into R&D. Look at generics — they are profitable. But are they profitable enough to start designing thier own drugs? No way.

By: Nathan

Nathan — Fri, 25 Jul 2008 23:18:28 +0000

PR Hack -
Just so you are clear, I’m not in favor of price controls in ANY market.

You write: “if you only made $11 as they do in Australia in every market, you would learn as a corporation to manufacture more efficiently, be more economical”

That may be true, or they may choose to stop selling the drug. I don’t know the answer. I only know one thing: They will only sell the drug at a profit. If the net world market at $11 is not profitable, they will either raise prices in countries that allow them to raise prices (ie. the US) or they will simply stop selling. That would be ashame if it were the latter. You have to remember that economies of scale often do not work in the niche markets.