On Big Pharma, price gouging, and immorality
I know all about pharmaceutical pricing. I know big pharmaceutical companies can charge a fortune for a new drug. They attribute it to R&D (research & development) costs of bringing a new drug to market. That’s fine with me. They’re entitled to recoup their expenses and we need the continued development of new drugs. But once a drug has become well known and widely distributed and those initial expenses have been recouped, the price should start dropping. Because, after all, continuing production and distribution is the only remaining cost. When the patent on the new drug finally expires and a generic form hits the market, the price should drop even more. Except sometimes it doesn’t.
When and if it doesn’t, and especially if the price suddenly starts going up again, you know you’re looking at a case of price gouging and/or profiteering. On the backs of people who need the drug to maintain their health, cure a disease, or in some cases, save their lives.
What happens if the patients can’t afford the higher price? Nothing much. They might have to forego little luxuries like food. Or resign themselves to living in pain and misery, or die suddenly from a reversible allergic reaction, or perhaps just die slowly from some otherwise curable disease.
We saw such price gouging last year when Turing Pharmaceuticals CEO Martin Shkreli jacked up the price of Daraprim, the only known drug for treating toxoplasmosis, from $13.50 to $750 per pill. Roughly a 5,000% increase. The drug had been on the market for a number of years and cost about $1 per pill to produce. A pill today costs “only” $375, a 50% reduction, Shkreli brags.
Now, in an ugly case of déjà vu, Mylan, the producer of EpiPens, emergency treatment for life-threatening allergic reactions, has raised the price of a two-pack of the pens from the 2009 price of $100 to today’s $600. And during those years when the wholesale price of EpiPens was going up 400%, the income of Mylan CEO Heather Bresch went up 671%, from a meager $2,453,456 in 2007 to a slightly more generous $18,931,068 last year, according to Forbes. And I’ll bet the poor dear still hasn’t a thing to wear.
We all learned about capitalism in school. We know how people are entitled to get a fair return on their investment, whether it’s the CEO, the worker bees, or the stockholders. But there’s a huge difference between a fair return and the price gouging that’s going on here.
Price gouging hurts those who buy the product, and when the product is an essential life-saving medication, price gouging crosses the line. It has become immoral and unethical. And it ought to be illegal.