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.

Mylan CEO Heather Bresch (Photo: Andrew Hetherington/Redux)
Mylan CEO Heather Bresch  (Photo: Andrew Hetherington/Redux)

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.



50 thoughts on “On Big Pharma, price gouging, and immorality

  1. The reason that the “big pharma co’s” don’t like Australia is because our Government has capped what they can charge. And get way with it!
    The cost to the people is subsidised by the government, (which is the people of course) and the ‘pc’s’ don’t like it one little bit.
    It costs me, being old, $5.80 for each prescription drug that I have to have and would you believe that I only need two yes 2 drugs that require prescriptions, the other 8 pills I have to take are just vitamin & mineral pills and capsules.
    My wife several years younger than me takes a damned sight more than me, she has four yes 4 XD, and they cost the same &5.80!
    The costs to those not of senior status runs around $30 per scrip; which is still reasonable; those on welfare or pensions of anykind pay the $5.80.

    And that is how it should be; cos I’m a socialist XD XD XD XD

    1. The best way for us to accomplish that here would be for a pool as large as, say, Medicare, to use its leverage to negotiate lower prices from drug companies. But before debates even started on Obama’s Affordable Care Act, he made a secret agreement with the drug companies to leave their profits untouched. Big opportunity missed. Furthermore, the government doesn’t step in anywhere to try to negotiate lower prices for us. And in fact it prohibits our buying drugs from Canda or any foreign country — they’re “protecting us” from possible counterfeit, dangerous, contaminated, etc. foreign drugs. That, of course, protects US drug companies from having to compete with them on price. So while I certainly don’t want any dangerous prescription meds getting into my supply, I hate paying the high prices that result.

      1. It’s all about money and profit isn’t it, the big pharms have tried manyatime to put pressure on Australian Govt’s to let them have their head but luckily for whosoever’s in government here they haven’t bowed to the wishes, (although I suspect or Liberal Party Govt (read GOP) would dearly love to), because they’d be kicked out of office and never get back into ‘power’ again.

        Even the liberal (again read GOP) voters here will not put up with that nonsense! Some sort of people power methinks.

        They’ve tried that nonsense about dangerous drugs etc but it won’t work, we just do not believe them for one moment, and our pollies know it full well!

          1. Pretty disgusting, isn’t it? I think I read somewhere once that the pharmaceutical industry has the highest profit margin of any business in the country.

      2. I think you will find that “Obama’s secret deal” was in fact forced by Republicans protecting Big Pharma’s profits. The Democrats tried and failed to get Medicare the authority to leverage the cost of drugs. Same with legal buying of foreign drugs. Also, most basic R&D for new drugs is done by government scientists. The development costs to drug companies are primarily doing trials to prove efficacy and safety, admittedly significant but less than real research. The fundamental flaw in our system is that it is for profit, unlike Australia or any other first-tier country in the world. To expect any company in the U.S. to put patient welfare ahead stockholder interests is unrealistic. These problems will persist until we get a single-payer government system.

  2. Just buy another companies version of the same thing. When people stop paying for it, the price will go down. True capitalism takes care of gougers like this. Sometimes forever more.

    About 4 years ago I mentioned to my general practice doctor the difficulty I had paying for a certain medication. He told me where to get it offshore. I only take one (normally) expensive drug and I get it from an Indian pharmacy for about one-tenth the USA name brand (no generics available) price.

    1. That should not be necessary! Why should you have to do that, still as long as you have weak/corrupt/money hungry politians, who are always ready with their hands out for generous donations so that they can keep their cushie jobs you’re going to have to suffer the indignity of being a rich first world country who cannot look after your weak, poor and disadvantaged.

    2. There’s not always a comparable drug or acceptable alternative available. If doctors start recommending some of the options shown in your link, their sales will boom.

    3. This is what the FDA says about getting drugs from foreign companies:

      In most circumstances, it is illegal for individuals to import drugs into the United States for personal use. This is because drugs from other countries that are available for purchase by individuals often have not been approved by FDA for use and sale in the United States. For example, if a drug is approved by Health Canada (FDA’s counterpart in Canada) but has not been approved by FDA, it is an unapproved drug in the United States and, therefore, illegal to import. FDA cannot ensure the safety and effectiveness of drugs that it has not approved.

      That said, there are some exceptions that involve some red tape and I don’t blame you for doing it. I would too. But wouldn’t it be nice if there were a system that promoted real competition and that was also safe?

      1. From what I’ve read here, most don’t want the inconvenience of real competition. They’d rather have other peoples time and money handle all their life choices for them. Which to me is sickening.

        1. To me too, Ima. And the heart of the problem is not capitalism of course, it is a deeply flawed patent system that enables Big Pharma companies to make minor changes to a drug to extend patents without any substantive change chemically. For example, changing a med to an extended-release form extends the patent! Most if not all of the outrageous examples in the news lately involve companies who simply bought the rights and then exploited them, no research required. If Australia and Canada can fix this, why can’t we?

          1. Socialized medicine is not the same as single-payer, something a lot of Americans don’t understand. I’m all for single payer. Not at all sure I’m ready for my doctors to be government employees.

          2. Our doctors are not government employees, they can practice privately if they choose and charge whatever they think is a fair thing, and there are a lot that do. There are also many many more who choose not to and there are those who have a foot in each camp. All in all I think we have the perfect set up here.

          3. So it’s sort of “partially socialized”? Still, such a radical change from the system we have now, it’s hard to imagine it ever happening here. Not intentionally anyway. A total collapse of the current system (certainly a possibility) might do it.

          4. Obviously… It’s too easy to have an old patent extended. The original intent was to protect a completely new product or procedure heretofore unknown.

            What do you want to bet that big pharma has had a hand in writing patent law? And subsequently, who can we blame for passing them? The same old cast of mainstream megalomaniac legislators and then the presidents without the cajones to veto them.

            And BTW, all price fixing does is stifle innovation and progress. Where do NEW products come from? Not from a place that put a cap on returns on investment.

          5. I understand that most laws are written primarily by lobbyists who, in their great generosity and concern for the country, offer these drafts to their favorite senators and congressmen in Washington. Just helping out, you know. The politicians have so much on their plates, poor dears. So when it comes to a specific issue, the lobbyists from that particular industry, who obviously know a lot more about it, are only too happy to help out and draft the language for the politicians.

            Sheesh, what a cesspool.

          6. Also BTW, competition works wonderfully at the small business level, but not with oligopolies or monopolies. Regulation is essential for those, and for industries essential to social stability. Utilities are a good example and the healthcare industry should be no less so.

          7. Yes, of course. That’s why people from all over the socialized world come to the USA to be treated in the most advanced hospitals with the newest medical procedures and widest variety of drugs. Please.

          8. Very true. The one’s who come this way are limited to those who can afford to pay our exorbitant rates for the very best treatment on Earth. Those going the other way are folks like me who cannot afford those rates for routine medications and sometimes risk their lives in places with little or no oversight.

          9. I doubt that you could get any better treatment anywhere in the world, which I believe includes the USA, than I received at no cost, from the doctors, and staff at the RPAH in Sydne,y when I had a total gastrectomy in June of 2015.

            But then I’m perhaps somewhat biased towards Australia and our socialized Medicare system which is something which seems to go against your grain.

  3. Just one more note to add to your story. According to everything I’ve read about the EpiPen, the research and development costs were born by our government. So it’s a little hard to swallow Mylan’s “recouping our costs” meme…

  4. As long as they can enjoy price gouging, nothing will change. Don’t you love the way they raise the price %5000 then cut it in half and get away with it? Of course they aren’t the only liars and cheaters, why we need regulation.

  5. It probably won’t happen in my lifetime, but the greedy b….ds running our drug companies and health providing corporations eventually will force the very thing they fear–completely socialized medicine–on themselves. Would that it would happen soon, but that seems unrealistic.

  6. Kind of on topic: My husband’s 99 year old aunt had a minor procedure done–getting a pedicure from a podiatrist– for which Medicare was charged $500.00. She reported this to Medicare and said that even though she was not being charged herself it was unethical to gouge the government. We should all do this if we feel overcharging is going on.

    1. An admirable thought, to report any entity we think is overcharging. But who do you report to whom? It’s a tangled circle of responsibility. Everybody is trying to get as much as they can from the system. Doctors, hospitals, and pharmaceutical companies charge what they think (or hope) Medicare will pay, if not more. Medicare bases its payments on what doctors, hospitals, and pharmaceutical companies are charging. Everybody charges more to get more, and nobody tries to keep a lid on it by charging less, or the least amount possible. To that add the eternal pressure of inflation, patients seeking unneeded services, and patients not paying for services received. And once you’re into the weeds on say, cancer treatment, with tens of thousands of dollars being charged by numerous providers for drugs and treatments we know nothing about — how can the patient possibly judge what is or is not a fair price?

      Your husband’s aunt is a rare bird who harkens back to the past I remember, when the doctor and patient agreed on charges, the patient paid the doctor, and the insurance company was simply a third party that might or might not be involved in the transaction after the fact (if the patient had opted to buy insurance).

      1. I remember those days too, Pied. Healthcare costs were paid in cash or personal credit and weren’t priced beyond the ability of the majority to pay. I enviously remember those days when I had to deposit 200 dollars in a hospital account prior to checking my wife into the hospital for our first and second born.

        BTW, I still have the receipt for my own birth which includes hospital, lab work, medicine and doctor fees… $19.28. The FED hasn’t been kind to the value of a dollar over the past 76 years.

        1. Now THAT is an interesting piece of memorabilia to have! All I recall is when I was very young, my dad, an ob/gyn, often accepted chickens, baked goods, etc., in payment for his services.

          And while I don’t recall the cost of my son’s birth, I do remember being in the hospital for 5 days for a perfectly normal delivery. Today I’d probably be discharged the same day.

  7. Most concerning. There is no alternative.
    Just as disturbing is the fact that this CEO (her dad a Senator – and if you read her bio and how she got this job and got promoted….) was a major force pressuring Congress to mandate all schools in the US mus have these pens on hand, it even gets uglier. (Just like the Educational/textbook companies pushing for Common Core so they can get mandates guaranteeing their products are purchased across the board in all 50 states)

    1. It occurred to me as I was writing that it would be simpler for the schools to keep the pens on hand than for every allergic student to have to carry them (big responsibility for a kid). I guess the company just figures they’ll sell more if both individuals AND schools buy them, particularly if there’s a mandate that schools buy them. The double packs are already the result of a govt mandate, issued because one pen is not always enough to stop an attack, and it only lasts about 10 minutes, often not long enough to get to a hospital.

      Why are we playing these games with people’s lives!!!!

      1. Some kids carry those in a specially marked tummy pack everywhere – to and from school and places. Timing is so short to save them.
        In this state, those pens/all medications sent from home are checked in to the nurse – with exceptions of pens maybe given to a teacher. Schools should have the pens, no question, but looks suspicious when a monolply works to create a mandate.
        These pens have a short shelf life: one year.
        Those families/schools and all the rest of us should be able to mail order purchase meds from Canada.
        It’s all about profit

... and that's my two cents