Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Health - Disability
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions


Upload your resume securely at https://www.dwsimpson.com
to be contacted when new jobs meet your skills and objectives.


Reply
 
Thread Tools Search this Thread Display Modes
  #31  
Old 09-28-2015, 07:35 PM
Guest
Guest
 
Posts: n/a
Default

More on Valeant's history of price increases courtesy of Citron research (via Zerohedge):



Quote:
Originally Posted by Zerohedge
And there you have it: boost the prices of dozens of drugs in the span of 1-3 years anywhere between 100% and 800% and nobody notices (thank you insurance companies). But hike the price of one drug by 5,500% and suddenly all of America thinks you are satan incarnate.

Indeed, as Citron concludes, "In the Twitter-storm furor over Turing’s recent one-drug price gouge attempt, the media has overlooked the reality that Martin Shkreli was created by the system. Shkreli is merely a rogue trying to play the gambit that Valeant has perfected."

And just like Shrekli burst the Valeant bubble and led to broad contagion across the biotech sector, Valeant's far more egregious pricing strategy, in the words of Citron, "jeopardizes the entire US pharmaceutical industry, and its status as a leader in the development of drugs for the entire medical system."
Reply With Quote
  #32  
Old 09-28-2015, 07:43 PM
Guest
Guest
 
Posts: n/a
Default

It is pretty amazing to me that "pharmaceutical" companies can exist that spend little to nothing on R&D but simply buy portfolios of drugs and jack up the prices.

I don't want to live on this planet any more
Reply With Quote
  #33  
Old 09-28-2015, 08:09 PM
jas66Kent jas66Kent is offline
Member
SOA
 
Join Date: May 2012
Location: London
Favorite beer: Corona :)
Posts: 22,630
Default

Classic rent-seeking behavior if you ask me. Time to bring down the hammer on these cretins.
Reply With Quote
  #34  
Old 09-28-2015, 08:10 PM
Dr T Non-Fan Dr T Non-Fan is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: Just outside of Nowhere
Posts: 93,102
Default

When they buy the portfolios, they are spending money on R&D. Just sort of outsourced the work.
__________________
"Facebook is a toilet." -- LWTwJO
Reply With Quote
  #35  
Old 09-28-2015, 08:30 PM
Guest
Guest
 
Posts: n/a
Default

The drug industry wants us to think Martin Shkreli is a rogue CEO. He isn’t.

Quote:
Originally Posted by Washington Post
This week, a roiling controversy was ignited after Turing Pharmaceuticals chief executive Martin Shkreli hiked the price for his drug Daraprim by a mind-boggling 4,000 percent. The major pharmaceutical and biotech industry groups have portrayed Shkreli's actions as totally repugnant and the work of just one company, acting alone, with a flippant young chief executive who doesn't reflect the broader values, practices, or trends of other companies.

But it's not, as the colchicine case shows. Here's why: [SPOILER FOR SIZE]

Spoiler:
...
Even among generic drugs, a class of medicines that is saving us money, some prices are going through the roof.

For example, tetracycline, an antibiotic discovered in 1948, cost 5 cents for a 500 milligram capsule back in November of 2013, according to a Medicaid database on the prices pharmacies pay to acquire drugs. Nearly two years later, it's coming in at $11 a pill -- a nearly 2,200 percent increase. Clomipramine, an antidepressant developed in the 1960s used to treat obsessive-compulsive disorder, cost 22 cents per pill in November 2012. Now, it's $8.17 -- a 3,600 percent increase.
...
In 2010, Amedra Pharmaceuticals bought the rights to abendazole, an off-patent drug used to treat intestinal parasites. At the time, the average wholesale price of the drug was $6 a day. By 2013, it was $120 -- a nearly 2,000 percent increase. An analysis in the New England Journal of Medicine found that Medicaid spending on the drug went through the roof, from less than $100,000 in 2008 to more than $7.5 million in 2013.

Amedra had also acquired Daraprim in 2010 and raised the price of that drug, albeit much more gradually than Shkreli, who acquired it in August.

"Amedra's business may be to corner a niche market for a pharmaceutical agent," Kesselheim and colleagues wrote. "Manufacturers of generic drugs that legally obtain a market monopoly are free to unilaterally raise the prices of their products."
...
The trouble is this: right now, we can't tell why prices are high, or even if they are high. New drugs that come on the market are often expensive because, companies say, they need to recover the cost of the innovation that led to the breakthrough. When monopolies exist, either because a new drug is the first to treat an illness or an old drug just doesn't have competitors, drug prices may also be high. The problem is that we have created a system where it's pretty hard to draw a hard line between the prices that are high for a good reason and the ones that are not.

Rather than vituperate the celebrity villain du jour, many economists think it's time to have a serious consideration of how drug prices reflect their value. The drug industry trade group keeps reminding the public that drug spending has been holding steady for years, at about 10 percent of the total health-care pie. They point to that as evidence that drugs are a special area of the health care industry, unlike almost any other sector, where competition occurs and prices actually go down over time.

But Pearson said many people believe drug spending has held steady because of a massive and successful push to get people to use cost-saving generic drugs.

"That created the financial cushion to absorb the increasing prices of new drugs," Pearson said. "Now we’re at the exciting or terrifying time that we’ve maxed that out; now we’re going to get these higher prices and we can’t turn around and find an easy way to save money somewhere else."

What Shkreli did was unusual, for a number of reasons. But he isn't as much of an outlier as the drug industry would like us to think.
Reply With Quote
  #36  
Old 09-28-2015, 08:58 PM
Guest
Guest
 
Posts: n/a
Default

Here's an article from a few years ago (December 29, 2012) showing that this isn't a new trick.

Questcor Finds Profits, at $28,000 a Vial

Quote:
Originally Posted by NYT
ANAHEIM, Calif.

THE doctor was dumbfounded: a drug that used to cost $50 was now selling for $28,000 for a 5-milliliter vial.

The physician, Dr. Ladislas Lazaro IV, remembered occasionally prescribing this anti-inflammatory, named H.P. Acthar Gel, for gout back in the early 1990s. Then the drug seemed to fade from view. Dr. Lazaro had all but forgotten about it, until a sales representative from a company called Questcor Pharmaceuticals appeared at his office and suggested that he try it for various rheumatologic conditions.

“I’ve never seen anything like this,” Dr. Lazaro, a rheumatologist in Lafayette, La., says of the price increase.

How the price of this drug rose so far, so fast is a story for these troubled times in American health care — a tale of aggressive marketing, questionable medicine and, not least, out-of-control costs. At the center of it is Questcor, which turned the once-obscure Acthar into a hugely profitable wonder drug and itself into one of Wall Street’s highest fliers.

At least until recently, that is. Now some doctors, insurance companies and investors are beginning to have doubts about whether the drug is really any better than much cheaper alternatives. Short-sellers have written scathing criticisms of the company, questioning its marketing tactics and predicting that its shareholders are highly vulnerable.

That Acthar is even a potential blockbuster is a remarkable turn of events, considering that the drug was developed in the 1950s by a division of Armour & Company, the meatpacking company that once ruled the Union Stock Yards of Chicago. As in the 1950s, Acthar is still extracted from the pituitary glands of slaughtered pigs — essentially a byproduct of the meatpacking industry.

The most important use of Acthar has been to treat infantile spasms, also known as West syndrome, a rare, sometimes fatal epileptic disorder that generally strikes before the age of 1.

For several years, Questcor, which is based in Anaheim, lost money on Acthar because the drug’s market was so small. In 2007, it raised the price overnight, to more than $23,000 a vial, from $1,650, bringing the cost of a typical course of treatment for infantile spasms to above $100,000. It said it needed the high price to keep the drug on the market.

“We have this drug at a very high price right now because, really, our principal market is infantile spasms,” Don M. Bailey, Questcor’s chief executive, told analysts in 2009. “And we only have about 800 patients a year. It’s a very, very small — tiny — market.”

Companies often charge stratospheric prices for drugs for rare diseases — known as orphan drugs — and Acthar’s price is not as high as some. Society generally tolerates those costs to encourage drug companies to develop crucial, possibly lifesaving drugs for these often neglected diseases.

But Questcor did almost no research or development to bring Acthar to market, merely buying the rights to the drug from its previous owner for $100,000 in 2001. And while the manufacturing of Acthar is complex, it accounts for only about 1 cent of every dollar that Questcor charges for the drug.
Much more at the link
Reply With Quote
  #37  
Old 09-28-2015, 08:59 PM
Guest
Guest
 
Posts: n/a
Default

Quote:
Originally Posted by Dr T Non-Fan View Post
When they buy the portfolios, they are spending money on R&D. Just sort of outsourced the work.
How many times do people need to pay for the same R&D costs?
Reply With Quote
  #38  
Old 09-29-2015, 12:01 PM
FormLetter's Avatar
FormLetter FormLetter is offline
Member
 
Join Date: Feb 2006
Posts: 48,674
Default

Quote:
Originally Posted by Dismal Science View Post
How many times do people need to pay for the same R&D costs?
As many times as it takes.

Stated differently: As many times as it is tolerated.
__________________
Come join the AO Rap Battle Tournament 2013:
http://www.actuarialoutpost.com/actu...33#post7082433
Reply With Quote
  #39  
Old 10-02-2015, 12:59 PM
Guest
Guest
 
Posts: n/a
Default

Valeant’s High-Price Drug Strategy

Quote:
Originally Posted by NYT Excerpts
Talk about a reversal of fortune.

Until recently, investors were positively starstruck by drug companies that could raise prices indiscriminately, letting their patients struggle to pay the freight. Lauded for a laserlike focus on shareholder returns, companies like Valeant Pharmaceuticals International, a multinational specialty drug company based in Quebec, received high marks and even higher valuations from besotted shareholders.

Now, however, investors are beginning to see the peril in such a business model. Sure, price jumps may generate earnings and stock gains, but when the enrichment of a few comes at the cost of many, unwanted scrutiny often follows.

The spotlight soon fell on Valeant, which generated $8.25 billion in revenue last year, up 43 percent from 2013. Among its well-known drugs is Ativan, a treatment for anxiety.

Renee Soto, a spokeswoman for Valeant, said in a statement that the company priced its treatments based on many factors, “including clinical benefits and the value they bring to patients, physicians, payers and society.” It also has “robust patient assistance programs to help patients who face financial obstacles,” she said.

One argument for high prices on pharmaceuticals is that the money goes to research for new cures. But this is not a Valeant strategy.

While other multinational pharmaceutical companies spend well into the double digits as a percentage of sales, Valeant’s 2014 annual report shows that the company spent $246 million on research and development — just 3 percent of sales. Another way to think about that: Valeant paid its five highest-paid executives 1.5 percent of sales, or $123 million, last year.

Rather than develop drugs, though, Valeant acquires them. Since 2010, it has acquired companies with a total value of at least $36 billion, mostly in the United States. It is the sixth-largest acquirer, globally, by deal size.
Gotta love the bullshit corporate PR speak from Renee Soto
Reply With Quote
  #40  
Old 10-03-2015, 06:04 PM
Guest
Guest
 
Posts: n/a
Default

Pfizer Raised Prices on 133 Drugs This Year, And It's Not Alone

Quote:
Originally Posted by Bloomberg
Pfizer Inc., the nation’s biggest drugmaker, has raised prices on 133 of its brand-name products in the U.S. this year, according to research from UBS, more than three-quarters of which added up to hikes of 10 percent or more. It’s not alone. Rival Merck & Co. raised the price of 38 drugs, about a quarter of which resulted in increases of 10 percent or more. Pfizer sells more than 600 drugs globally while Merck has more than 200 worldwide, including almost 100 in the U.S.

Drugmakers have long said these increases aren’t felt by most consumers because intermediaries like insurers negotiate what is ultimately paid -- meaning what they really charge for their drugs is far below the list price. Pfizer and its rivals say they can’t make those negotiated prices public for competitive reasons.

Like its competitors, Pfizer has been raising prices on older drugs in its portfolio for years. The increases in the U.S. have added $1.07 billion of quarterly revenue from mid-2012 to the middle of this year, helping limit the company’s total decline in quarterly revenue over that time period to $2 billion even as patents on blockbuster drugs expired, according to estimates from SSR, an investment research firm. In the case of Bristol-Myers Squibb Co., increasing the price of existing drugs in the U.S. brought in $435 million of revenue over the past three years, leaving the contraction of the company’s global sales at $280 million, SSR estimates show.
...
"Some companies have made greater use of price increase than others, and those are typically companies that are trying to paper over financially an absence of innovation that they’ve not been able to generate internally," said John Schroer, sector head of health care at Allianz Global Investors. Schroer’s firm has shares in Pfizer but he said its holding is underweight compared with benchmark indexes.
...
Pfizer has raised list prices on some of its biggest drugs this year, including two 9.4 percent increases on Lyrica, the pain medicine that’s expected to be its second-biggest selling drug globally in 2015 with $4.8 billion in sales, according to a poll of Bloomberg analysts. That compares with $5.17 billion last year, when it was the company’s top-selling product.

Pfizer is one of the leaders among the largest U.S. pharmaceutical companies in getting sales gains through price increases on its top products, even taking discounts into account, according to Morgan Stanley research. In a note Friday, analysts at Morgan Stanley said Pfizer’s net prices grew 11 percent a year on average from 2012 to 2014. List prices on drugs from large pharmaceutical companies grew 12 percent a year in that span, leading to an 8 percent annual increase in net prices, after discounts, the analysts said.

Pfizer’s Lyrica contributed $208 million in additional quarterly sales attributable solely to price hikes, over a three-year period in which the price rose by 51.7 percent, according to SSR’s estimates. Viagra contributed $166 million in extra quarterly sales from price hikes during a period in which its price rose 72.1 percent, SSR said. Those figures indicate that the insurers only paid a portion of the price increases.
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 02:41 AM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.14820 seconds with 9 queries