Posted on Sep 23, 2015
Drug Goes From $13.50 a Tablet to $750, Overnight
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I am neither for, nor am I against capitalism. I am for a moderation of how things should work ethically. This is a perfect example of using loopholes to exploit capitalism.
I believe at this point the CEO has change the price back over threats and an outrage. But what do you guys think?
I believe at this point the CEO has change the price back over threats and an outrage. But what do you guys think?
Medicine
Capital Markets
Economics
Edited 9 y ago
Posted 9 y ago
Responses: 13
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Little info on this.
The guy is what can be best called a "profiteer" as in someone who is intentionally driving the price up to make an "unfair or excessive profit."
He believes that saving someone's life should cost "at a minimum $100,000" and the drug as previously sold was doing it for about $1000.00. So, he bought an existing "Patent Process" and jacked up the prices.
I'm all for capitalism. Very Pro-Capitalism. Make your money, make a profit. Don't bleed people to do it. That's the line, and this guy crossed it.
Now, the problem we run into is that there are LOTS of these type drugs that were developed in the 50s-70s, and they are dirt cheap to make if you have the production capability. Not many companies make them, because they're dirt cheap to make, and hence slim profits, and why compete and drive the profits down. So what you do is you buy up the competitors (licenses) and you become a monopoly. Now you are the only one with the capability of making it.
This created a "barrier of entry" even though the patent is expired on the drug itself (not the process), which means that even if someone else copies the drug, and tries to compete at the new higher price, this yahoo, can tank the market and effectively kill his competition.
Example: Pill costs $20.00. 5 companies on market that make it. Buy all patent processes. Raise price to $1000.00. New company comes in, after R&D to develop new process, they have to market pill at $50.00+ to make money. First company just drops price back to original $20.00 if second company even attempts to sell it. Second company is effectively barred from entry. We see it a lot with telecommunication companies as well.
So what's the cure? US Government has to step in. I hate that answer. But this is where we need a "Referee" to call foul.
The guy is what can be best called a "profiteer" as in someone who is intentionally driving the price up to make an "unfair or excessive profit."
He believes that saving someone's life should cost "at a minimum $100,000" and the drug as previously sold was doing it for about $1000.00. So, he bought an existing "Patent Process" and jacked up the prices.
I'm all for capitalism. Very Pro-Capitalism. Make your money, make a profit. Don't bleed people to do it. That's the line, and this guy crossed it.
Now, the problem we run into is that there are LOTS of these type drugs that were developed in the 50s-70s, and they are dirt cheap to make if you have the production capability. Not many companies make them, because they're dirt cheap to make, and hence slim profits, and why compete and drive the profits down. So what you do is you buy up the competitors (licenses) and you become a monopoly. Now you are the only one with the capability of making it.
This created a "barrier of entry" even though the patent is expired on the drug itself (not the process), which means that even if someone else copies the drug, and tries to compete at the new higher price, this yahoo, can tank the market and effectively kill his competition.
Example: Pill costs $20.00. 5 companies on market that make it. Buy all patent processes. Raise price to $1000.00. New company comes in, after R&D to develop new process, they have to market pill at $50.00+ to make money. First company just drops price back to original $20.00 if second company even attempts to sell it. Second company is effectively barred from entry. We see it a lot with telecommunication companies as well.
So what's the cure? US Government has to step in. I hate that answer. But this is where we need a "Referee" to call foul.
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Capt Seid Waddell
SGT Jeremiah B., both monopolies and government regulation distort the free market and work against capitalism's natural function.
An interesting paper on the arguments over capitalism over time is here:
http://www.econlib.org/library/Enc/Capitalism.html
An interesting paper on the arguments over capitalism over time is here:
http://www.econlib.org/library/Enc/Capitalism.html
Capitalism: The Concise Encyclopedia of Economics | Library of Economics and Liberty
The emergence of capitalism is often mistakenly linked to a Puritan work ethic. German sociologist Max Weber, writing in 1903, stated that the catalyst for capitalism was in seventeenth-century England, where members of a religious sect, the Puritans, under the sway of John Calvin’s doctrine of predestination, channeled their energies into hard work, reinvestment, and modest living, and then carried these attitudes to New England. Weber’s...
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Capt Seid Waddell
Sgt Aaron Kennedy, MS, "You can have a singular supply point without abuse of pricing."
I disagree. Without competition there is no free market. That the government does this as well is not capitalism either - quite the reverse is true.
That there can be high barriers to entry in a market is not necessarily a refutation of competition in a free market - it may simply reflect the fact that someone has found a way to drive the prices lower than others can compete with. Where it is a problem is in the case that government regulation artificially limits competition.
I disagree. Without competition there is no free market. That the government does this as well is not capitalism either - quite the reverse is true.
That there can be high barriers to entry in a market is not necessarily a refutation of competition in a free market - it may simply reflect the fact that someone has found a way to drive the prices lower than others can compete with. Where it is a problem is in the case that government regulation artificially limits competition.
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Sgt Aaron Kennedy, MS
Capt Seid Waddell Demand is the primary consideration. A company or person can only "exploit" the demand so much. Raise the price too much and demand disappears. You essentially price yourself out of the market with less expensive alternatives, including the free one of "nothing at all."
Most of us aren't buying this drug. Those who can't afford it won't buy it. This person is betting he has a large enough market of people who view it as a necessity (and hence are willing to pay for it) AND can afford it compared to the much lower price point model that previously existed. Those are competing forces within capitalism, which are neither good nor bad. The fact that it is medicine, and cannot be viewed as a luxury is what changes the ethics of this situation.
Monopolies themselves are still tools, and as tools have neutral ethics by default. It's the person that exploits them that makes them good or bad.
Most of us aren't buying this drug. Those who can't afford it won't buy it. This person is betting he has a large enough market of people who view it as a necessity (and hence are willing to pay for it) AND can afford it compared to the much lower price point model that previously existed. Those are competing forces within capitalism, which are neither good nor bad. The fact that it is medicine, and cannot be viewed as a luxury is what changes the ethics of this situation.
Monopolies themselves are still tools, and as tools have neutral ethics by default. It's the person that exploits them that makes them good or bad.
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Capt Seid Waddell
Sgt Aaron Kennedy, MS, I disagree. Monopolies by their very nature restrict supply to increase prices. There is no free market when there is no competition.
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I think greedy people will not hesitate to stoop to any level to make a dollar.
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I do not know what the medication is used for, but I am sure that there are alternative medications that a doctor can prescribe which can easily replace this expensive drug. In fact medication combined with a healthy diet and exercise will work wonders.
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SGT Jeremiah B.
In this particular case, there is no alternative because this one has been available cheaply for so long. This guy is just trying to make as much money as possible before his business model gets stepped on.
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CPT Pedro Meza
SGT Jeremiah B. - There must be away to replace his drug that is now expensive and boycott him. Also like said time for doctors to look at better diet combined with exercise and another alternative med.
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SGT Jeremiah B.
CPT Pedro Meza - This drug is mostly used by the HIV-infected or pregnant to deal with a very specific problem as quickly as possible. I'm sure there are alternatives but they might be very expensive or much less effective. Diet and exercise certainly help, but the patients are already immuno-compromised in ways that are largely unaffected by alternative treatments.
Mostly I think this guy just needs to be made an example of so other young, brash sociopaths think twice about trying something like it.
Mostly I think this guy just needs to be made an example of so other young, brash sociopaths think twice about trying something like it.
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