The Washington Post has a blockbuster on collusion between generic drug manufacturers:
Executives at more than a dozen generic-drug companies had a form of shorthand to describe how they conducted business, insider lingo worked out over steak dinners, cocktail receptions and rounds of golf.
The “sandbox,” according to investigators, was the market for generic prescription drugs, where everyone was expected to play nice…
Officials from multiple states say these practices were central to illegal price-fixing schemes of massive proportion.
Generic drugs have the ability to offer large costs savings. Those savings only occur when there is real competition. Research ** has shown that generic drugs are significantly cheaper than brand name drugs when there are many manufacturers.
Collusion and c Conspiracy to fix prices is a direct pickpocketing by the generic manufacturers out of the pockets of patients and insurers.
This is going to be a huge deal if the collusion conspiracy can be proven.
** December 28, 2017 N Engl J Med 2017; 377:2597-2598 DOI: 10.1056/NEJMc1711899
Lapassionara
This affects my pocketbook, for sure. The price of my generics is close to the price for the branded medication. That sucks.
Fair Economist
(Adam Smith, Wealth of Nations).
Funny how the glibertarians and scamservatives always referring to the Wealth of Nations never bring up that quote.
Martin
Honestly, drug formulas should have a new economic model developed – where if a drug appears to be sufficiently beneficial to the public good that the government(s) buy out the patent. Drug makers can still be rewarded for developing new drugs, but they can’t rent seek off of them.
Ohio Mom
Is there any aspect of the medical-industrial complex that is not corrupt?
Even when you are in the office of a treasured doctor, the interactions are skewed by what the doctor knows will and won’t be accepted by the larger system.
p.a.
Can get better lawyers than R Giuliani.
p.a.
Sadly the drugsters…
Elizabelle
Quel surprise.
Thanks, David. I had not seen. Again, how … not surprising.
Punish them.
Corner Stone
Raise your hand if you didn’t think this was happening. Late stage capitalism will be the death of us all. One way or the other.
trollhattan
Yuge scramble among generic manufacturer CEOs to register new Twitter accounts.
“Pssst, everybody Tweet this at 11:25, pass it on:”
NO COLLUSION, NO COLLUSION!!! FAKE NEWS!!! NO COLLUSION!
satby
I’m so old I remember when blatant corruption was the mark of a third world country.
Corner Stone
@Martin:
***GASP***
How dare you, sir? If we start down this slippery slope there’s no telling where it might lead! Banks as utilities. Utilities as regulated utilities (instead of monopolies). Companies too large to effectively regulate for the common good broken up! I smell…socialism. Ocasio-Cortez got to you, didn’t she? Fess up, you commie neoliberal socialist.
Dorothy A. Winsor
So far, since my heart attack in August, I’ve paid the hospital and doctors $11. In those 6 months, my drugs have cost me $800. That’s after Medicare Part D pays its share.
Corner Stone
@trollhattan: They’ll just skip to Stage 4: Yeah, but just think of how much worse we would have done if Hillary were president.
efgoldman
Hahahahahahahahah
TenguPhule
Are we sure these folks aren’t talking about Donald Trump?
A Ghost To Most
@satby:
Are you implying USA is not now a third world country?
TenguPhule
@Ohio Mom:
No. SATSQ.
TenguPhule
@A Ghost To Most:
At this point we aspire to be a third world country.
TenguPhule
@Dorothy A. Winsor:
Obviously you haven’t paid the doctors enough for their work. //
TenguPhule
@Corner Stone:
Soylent Green is people!
schrodingers_cat
@satby: Third world countries have nothing on the corruption in the United States, where Rs make laws to make law breaking “legal”. You can tank the economy and not go to jail if you are too big to fail.
A Ghost To Most
@efgoldman:
No Collusion! No Collusion!
Conspiracy!
Welcome home.
Downpuppy
Drug companies are multinationals. They’re up to the same tricks in Europe, except that there it tends to involve somewhat less price gouging and more shortages.
rikyrah
Thanks for this, Mayhew.
Will spread the word.
A Ghost To Most
What’s the big deal? They’re only achieving synergy.
JPL
@trollhattan: So true. It’s actually price fixing synergy.
different-church-lady
@efgoldman: But what if they find a smocking gun?
Johnny Gentle (famous crooner)
And then Fox News and republicans will start the propaganda on their donor’s behalf arguing that it is GOOD for companies fix prices, because freedom and anti-regulation and owning the libs. Within weeks, republicans will support the price-fixing 65%-30%, with 5% undecided.
cmorenc
@Martin:
…and how exactly do you determine what an adequte economic “reward” is to assure adequate incentive for drug companies to invest $$ in the necessary R&D and clinical trials (which may or may not prove sufficiently effective to win FDA approval) to bring a new drug to market? How exactly do you propose to fairly price those patents to distinguish what level of compensation is adequate “reward” for development, versus “rent-seeking”?
Not doubting here that drug companies use (and often abuse) the temporary monopoly position their patents give them – but how to fix this problem with respect to leaving drug companies sufficient incentive to willingly invest (and take the risk that substantial sums may end up spent on failures) to develop new drugs, while preventing price-gouging – is a MUCH more difficult problem than you superficially make it seem. Not saying we don’t need to try to solve this, just that it isn’t going to be so easy as chanting “adequate reward yes, rent-seeking no”. The devil is in the essential details.
JPL
@A Ghost To Most: congrats for connecting the dots first. Someone over the weekend said that political synergy is the Harvard Law word for collusion.
TenguPhule
@cmorenc:
Let’s skip the middleman and nationalize research again to the Fed and States.
Corner Stone
@A Ghost To Most:
Penetration at all levels.
Corner Stone
@TenguPhule:
Do you really want a state that doesn’t believe in science to be in charge of Rx for patients?
Yutsano
@cmorenc:
Just one little problem there: the major drug companies are doing less and less of their own R&D research. Instead, they’re hoisting that major work off on universities and other labs for pennies for what it would cost them. They’re already getting a huge amount of their R&D subsidized by the federal government. Turning around and making that a public good from what already was government works isn’t that far of a stretch especially considering how much public investment has already occurred.
TenguPhule
@Corner Stone:
There are some states that believe in research as opposed to all of the big fucking drug companies believing research is something others are supposed to do and they are to steal.
??? Goku (aka Amerikan Baka) ??
OT: Elon Musk is saying he’s interested in taking over the closed GM plants in North America. Which would be cool, if he wasn’t an unstable egomaniac. I’d love for the plants to be converted to making electric cars of the future, but I don’t have much faith in Musk.
J R in WV
Wife was on a maintenance medication. She uses the AARP insurance which has her on a mail-order prescription outfit. They billed her $500 co-pay for the medication. She spoke to her doctor who practices at a non-profit clinic, and he told her to visit next the non-profit pharmacy, where the same drug cost her, no insurance cash deal, $80. This medication is available in generic, that’s what we’re talking about, the generic prices.
I also took a generic medication, which had a typical co-pay of between $5-10. Then one day I was told that it was no longer on the formulary, the insurance (Humera) company decided to no longer provide it to the customers. My doctor told me this drug had been bought by another of the MBA richy crowd, like Michael Shkreli had done. So the price went up by like 5,000% — now I’m taking an almost satisfactory drug that isn’t nearly as good as the one priced out of reach.
These bastards are killing people in order to make more money, and should be strung up with piano wire by the feet for people to drive by throwing sharp thing at them. Or just shot up with a big does of smack and left in a gutter. But put away so they can’t kill people for money any more. Yes, I’m talking about both pharma executives AND insurance executives. Murder for hire, the most of them.
JPL
@J R in WV: and they don’t care.
Aardvark Cheeselog
J. K. Galbraith sits up in his grave and says “I told you so.”
sukabi
@satby: still is, welcome to third.
Yarrow
@J R in WV:
Martin Shkreli, but no matter. I hadn’t thought of him for awhile. He’s in prison, just like Paul Manafort is. We need more of this.
catclub
@Lapassionara:
Once the generic comes out, the price of the branded medication falls to nearly match it. When there is NO generic is when they hike prices.
Mnemosyne
@cmorenc:
What Yutsy said — the drug companies do very little actual research these days. They should only get paid based on how much of their business is research done by actual employees of their company using company assets, not stuff that’s farmed out to universities or contractors. If it’s 5 percent of their business, that’s all they get paid.
sukabi
@cmorenc: Considering that pharmaceutical companies spend more on advertising their prescription drugs than they do on r&d perhaps part of the answer for more r&d money is to once again prohibit the advertising of drugs that you can’t just go buy off the shelf.
catclub
@J R in WV:
s/feet/testicles/
Mnemosyne
@catclub:
What this article seems to be indicating is that the opposite is happening: drug companies are colluding to make sure the generic’s price stays only slightly less than the name brand so they can make more money.
Corner Stone
@Yutsano:
They are essentially huge hedge fund companies that buy out smaller, more innovative Rx companies for their patents. It’s Vulture Capitalism in a whole other sphere.
TenguPhule
@??? Goku (aka Amerikan Baka) ??:
This remake of Terminator VI is terrible and all of the actors are making me root for the killer robots.
TenguPhule
@Corner Stone:
Dyson!
Yarrow
@sukabi: Advertising drugs is just so weird. “Ask your doctor about [______].” Why? Why would I do that? I don’t want to take any more medications than absolutely necessary! I’m not going to ask my doctor about a random drug that I don’t even know what it does.
TenguPhule
@J R in WV:
Why do you want them to die happy?
burnspbesq
@Martin:
You’ve got a Takings Clause problem there. No company is ever going to agree that the number the government proposes is “just compensation,” and there is enough at stake to justify balls-to-the-wall litigation in virtually every case.
Plus there is no legal impediment for me, PharmaMan, to put my IP beyond the jurisdiction of U.S. courts. Big Pharma has been doing that for decades, for tax reasons. New reason, same playbook.
TenguPhule
@burnspbesq:
This would be what the newly established Federal Assassins Bureau would be for.
TenguPhule
It never fucking stops!
TenguPhule
Stuck in moderation.
Corner Stone
@Yarrow:
“Possible side effects include death.” That always reminds me of the Katt Williams standup where he’s buying weed and the dealer calls it “Def”. And Katt is like, “Wait a minute. I hit it and die N-word? I got shit to do today!”
Dan B
@Martin: Somehow I seem to recall that most R&D on drugs was done by universities, especially public universities. The details of how drug companies end up “sponsoring” the research or acquiring the rights escapes me. High prices lawyers?
J R in WV
@Yarrow:
Hey, I got the last name spelt right, after all… how many Shkreli pharma felons are there anyways?
And thanks for the correction!! I’ll remember that fact for at least a couple of days… knew a Martin back in my Navy days, he was a pattern maker in the carpentry shop making patterns for the foundry to use to make a mold to pour a new metal part… amazing ship a big tender. Floating custom factory.
Ohio Mom
@??? Goku (aka Amerikan Baka) ??: It’s already been lost in the mists of time, but the Big car companies did not find car making profitable. They like making pickup trucks and SUVs.
But federal law required that a company’s overall fleet each year meet certain gas economy measures. The cars with good MPG stats balanced out the big vehicles with lousy gas mileage. Overall average goal achieved!
But then Trump threw out the requirement and making cars with good mileage no longer served a purpose. Thus making Lordstown and the other places with closed factories MAGA!
TenguPhule
@Dan B:
University Presidents with more arrogance then sense.
Mike G
@schrodingers_cat:
Third world countries have nothing on the corruption in the United States, where Rs make laws to make law breaking “legal”.
Like legislation making it illegal for Medicare to negotiate prices with drug makers.
“Free market” my ass.
gwangung
@Dan B: More like the basic research is done by higher education. Applications and development are done by spin offs or smaller private companies. Big Pharma cherry picks the late-stage, close to ready products.
TenguPhule
British House of Commons going apeshit over May’s Brexit backslide on debate and vote.
Her government could literally come down before Christmas.
JR
@Dan B: There is actually a *genuinely* good reason for how the government handles intellectual property issues with basic research. Whether the current system is still tenable is an open question.
For some background, it’s worth reading the story of Lenny Hayflick.
TenguPhule
And the week has only begun.
TenguPhule
/golf clap
TenguPhule
TenguPhule
FOR FUCKS SAKE STOP BEING STUPID YOU IDIOTS.
jl
Lots of discussion of patents and IP in comments, but these are generic drugs.
So, the problem is more often licensing, and concentration of production at one or two manufacturing sites. I don’t think anyone understands it well.
The FDA is very slow and clumsy at keeping licensing up with market conditions. It may have something to do with fact that, like patent office, the FDA supports a lot of its operations by processing patents. So, keeping up with need for licensing to keep pace with market developments is not so important.
The US drug supply chain is extremely concentrated. I think three distributors control over 95% of the market. Economies of scale often lead to generic drugs being produced as one of several secondary lines of production (they can’t support keeping the production line on their own, only if some more profitable drug on patent is also being produced) I remember hearing physicians and pharmacists being very blase about manufacturing and distributor market concentration, until all of a sudden crazy ass chaotic and almost impossible to predict shortages and price hikes started popping up like mushrooms after a rain.
But, extreme concentration of manufacturing facilities, ownership of license, and distributors, makes collusion easier. And that is on top of natural effects of manufacturing concentration, where any burp in a high profit primary manufacturing line can bring production of several low profit secondary lines to a temporary halt, or often permanent shut down.
Back in late 1990s, the US FDA and drug development process was accused of being very inefficient, and we could get more safer more newer more cheaper drugs and all problems would be solved if we could find ways to sneak profit motive into them, often through complicated and indirect back and side doors, to provide proper incentives. Not clear how well that has worked out.
Yarrow
@TenguPhule: Who’s funding the Sunrise Movement? I went to their Twitter feed and their pinned tweet says “Tell the Democrats we need a Green New Deal.” Why target the Democrats and not Republicans? Looks like ratfucking by Republicans to me.
We really need reform in how our politics and political influence organizations get funded.
gvg
@TenguPhule: no that is not true.
Public Universities have always published their basic research. The Universities are all talking to each other and doing BASIC science. Most of this ends up in the public domain and it’s a lot of the kind of research the government funds directly. This is not the same thing as development. that takes a whole bunch of what I would call second wave research by companies and does actually cost money to them. Probably not enough to justify their claims, but it’s not cheap either. Has to do with lots of trials etc. Taking some research about how something reacts in say the blood stream of mammals and turning it into a specific pill with a chart about doses for certain effects that a doctor can use and the government can approve, takes money and research too. I think the fact that there are two different kinds of research going on confuses the issues.
I also think that different science fields and different details of funding and product development issues, but I am not positive on that.
University Presidents are barely a factor in this. Congress becoming dumbed down with morons who don’t know how research benefits all of us including the companies has been a factor.
jl
@gvg: I don’t think anyone understands it very well. Bayh Dole Act is the place to start on how when and why, and who, may be converting public funded research into corporate profits protected by IP.
Fair Economist
@Dan B:
They typically toss the universities in question assorted financial benefits to sign over the rights. The universities are not capable of manufacturing drugs themselves so they are amenable.
jl
But I forgot the angle that SCOTUS said that it is legal for patent holders to provide ‘incentive payments’ (I’d call them bribes, but maybe that is just me), to keep all manner of competitive generic drugs off the market. But, I don’t know how important that factor is in the current mess.
Industry money is really really (really) important in keeping things running smoothly, so somehow, exactly what goes on economically with drug development and supply chain not a hot research topic for some reason. And the market of all sorts of generic medical drugs and equipment is just as completely opaque as those for drugs on patent. Even to university researchers. Public, academic, and private health providers hold info on pricing and supply extremely tightly, even to their own researchers and staff who do not need to know (and unless your job description involves making the revenue for them, you do not need to know). Probably US intelligence community could learn best practices of keeping everything super secret from them.
cynthia ackerman
@different-church-lady:
A good guy in a smock will save the day.
raven
@Fair Economist: My Lil Bit has been on this for 10 years
The vet who “invented it” made millions but she had to split it with the university because she was on the faculty when she did her work.
raven
Here’s her website
The Mission of http://www.IPAdvocate.org is important: we want to alert faculty scientists and student researchers to the hazards that lie along the path between invention and commercialization. We want to encourage the conveyance of academic discovery and innovation to the public while preserving the rights of the inventors.
IP Advocate encourages adoption of industry-wide best practices, transparent operations, open communication, a spirit of cooperation and mutual understanding between the university, its technology transfer office and its researchers and legislative support for these critical issues.
Gravenstone
@Yarrow:
Because the ads are intended to pander to hypochondriac America. “I totally have this symptom! I need to talk to my doc and get expensive medicine X today, before I die!!”
smedley the uncertain
@cmorenc: One possibility is to not allow patenting of medical products that result from NIH or other tax payer supported research. Or perhaps the Govt. retains the patent and simply licenses it to a pharmaceutical company.
TenguPhule
@Yarrow:
Worse. Real deal leftier then left Occupy folks.
ETA: though I’m sure an audit of their books will find GOP money.
Gravenstone
@Yarrow:
Ohhh so close to the truth. Not sure if I mean that sarcastically or not.
Jay
@Yarrow: @TenguPhule: @Gravenstone:
Protesting in support of a Green Plan infront of a climate change/science denying ReThug’s Office isn’t going to get you a Green Plan to Address Climate Change.
ReThugs don’t do Green Plans, they vote against them.
TenguPhule
@Jay: protesting at the office of an ally, who has yet to take her place as house speaker is dumber then dumb.
Jay
@TenguPhule:
It’s pretty obvious that you don’t understand the many different purposes of protests.
encephalopath
The DOJ knows exactly how to investigate and prosecute this stuff now. See the Lysine Price Fixing Conspiracy.
https://en.wikipedia.org/wiki/Lysine_price-fixing_conspiracy
I remember watching a documentary about that and one of the investigators saying at the end of the prosecution that any time he sees men in suits walking into a hotel in the middle of the day, he assumes that something nefarious is going on.
TenguPhule
@Jay: Its pretty obvious I have more common sense then they do.
ruemara
@TenguPhule: So a gift to the UK, then.
TenguPhule
@ruemara: We can only hope.
Yarrow
@TenguPhule: That’s what I meant. Any look at the ultra lefty organizations will turn up GOP money, most likely some of it via Russia.
@Gravenstone: A distinction without a difference at this point.
Brachiator
@TenguPhule:
That long?
Sadly enough, right now, May is one of the more stable UK politicians.
Yep. This is definitely a crazy start to the week.
The Pale Scot
@cmorenc:
Except that Big Pharma doesn’t do much research on new, novel drugs. The bulk of their R&D goes to making incremental changes to existing products so as to extend the patent. For the last decade or so venture capitalists have been fronting the cash for new drug developments from start ups. If the drug looked promising after Phase 1 trials the start up would be bought by the biggies. Then the bean counters figured out that they could wait until the start up was out of cash and buy it at discount and screw the VCs out of their profits. So now VCs have pulled away from all but the most obvious successes.
TenguPhule
@Brachiator:
Consistency is only a virtue when you’re not a screw-up.
Strong and stable she is not.
misterpuff
No Shitting in The Sandbox, where the Fat Cats Play.
Ruckus
@A Ghost To Most:
Are you implying that it’s not?
Ruckus
@J R in WV:
I’ve decided, J R, whatever you want you should have. I’ll even chip in for the smack and needles to help them regain/gain an understanding of not being douchebags and how that might just be better for them.
Ruckus
@Ohio Mom:
Also, how many of those factories have reached their lifespans? Can they be retrofitted to build cars the way it’s done today? The companies never use that as an excuse because then they would have to build a new factory at a much higher price than in another country. But a lot of the factories that were around in the 50s-70s or earlier, the buildings are old, the inside height is lacking, the openness is not there. They can’t build as efficient a production line there, so each car costs more.
Some of this is the cost of being an industrial country that wasn’t all or mostly destroyed by WWII.
Van Buren
Are anti price fixing laws one of those job killing regulations conservatives are always blathering about?
Couch commenter
From the original article:
These aren’t the smartest people in the room.
I’m rooting for long prison terms and hefty fines.