Cornering the Market on Essential Drugs

http://www.slate.com/articles/health_and_science/medical_examiner/2015/09/generic_drug_price_gouging_how_shkreli_and_other_monopolists_cornered_the.html

By Jeremy A. Greene
Sept. 23, 2015

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Though pinworms can be found in middle-class suburbs, the parasite is common in settings of urban poverty, including the low-rise public housing complexes across the street from my East Baltimore clinic, where far too many people struggle to survive on less than $2 a day.



The diagnosis itself was relatively easy to make, and though my patient had no insurance, I sent her to the pharmacy confident that the right drug for her disease, albendazole, should only cost a few dollars to fill. After all, the drug had been introduced in 1971, and by the 1980s its cost was so low and its use so broadly validated that it was added to the essential drugs list of the World Health Organization: a powerful medicine widely available for pennies a pill. When she returned an hour later saying that she could not afford the medication, I pressed for more detail. Sometimes even a few dollars can be too much for patients scraping to make rent or buy food for their families, and our staff has a limited ability to offer vouchers to help cover drug costs in times of need. Yet I was not prepared for the figure she showed me: The two pills of albendazole I had prescribed would cost her an untenable $330. As I soon discovered, the U.S. market for the once-generic drug albendazole had been cornered by a small pharmaceutical company called Amedra and retrofitted into a newly exclusive brand, Albenza, at more than $150 a pill.

This week’s revelation that another small pharmaceutical company, Turing Pharmaceuticals, acquired the sole U.S. distribution rights to another antiparasitic drug on the WHO essential drugs list and boosted its price by more than 5,000 percent,

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Shkreli is a new sort of villain in the passion play of the pharmaceutical industry. He is not playing the well-rehearsed role of the Big Pharma executive, excoriated for charging exorbitant prices for blockbuster drugs that are barely superior to existing generic forms. Nor is he playing the recently developed role of the biotech executive who justifies pricing truly innovative medicines so stratospherically high that they threaten to bankrupt state Medicaid systems. No, Shkreli and his less visible counterparts at Amedra Pharmaceuticals come from a new tier of smaller pharma firms that employ retro-monopolistic strategies to corner the market on old cheap drugs that no other companies are producing and remake them as old expensive drugs. They represent a new mutation of the “little pharma” generics firms that—until very recently—were assumed to be a sort of moral underdog, producing cheap versions of old medicines and helping once-innovative medicines become more widely accessible.

This phenomenon is not limited to antiparasitic drugs. Other, equally distressing examples can be found in reverse monopolies for old and essential treatments for asthma, diabetes, gout, heart disease, cancer, and even the supply chain for interventions as basic as bags of intravenous saline. These commodities represent a vital infrastructure of our health care system that is eroding from shortage to shortage and price hike to price hike, as once-competitive generic markets give way to new oligopolies and monopolies of medical interventions.

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Turing’s decision to raise prices is only the logical extension of a pharmaceutical marketplace that allows firms with monopolies the absolute right to set their own prices with no constraints. Unlike many other countries, including Canada, France, Australia, Germany, and the United Kingdom, the United States has resolutely refused to give our government the ability to negotiate drug prices. Instead, we continue to pay what firms ask and hope that the invisible hand of the market will match supply and demand—and eventually bring prices down. We trust that generic firms remain an efficient private sector solution to the public health problem of drug access. In return, we are confronted with market failures, drug shortages, and price increases.

tags: price gouging