Michael Hiltzik reported, Drug Pricing: That Pill That Went From $13.50 to $750 Can Now Be Had for $1. The pill in question is Daraprim. Hedge fund manager and all around libertarian idiot Martin Shkreli bought the only company making the generic drug and raised the price 5,556%. But it seems there was a special circumstance regarding this drug so that “compounding business” could make it an sell it without going through a big process with the FDA.
What’s remarkable is that the company, Imprimis, says that it is going to make a tidy profit selling the drug for one dollar. That is in contrast to Shkreli who was going around telling the world that they were losing money selling it for $13.50. I don’t think that anyone really bought that, but no reporter ever countered it. Who can say in the specific case because companies can do accounting in an endless number of ways. But the Imprimis CEO, Mark Baum, said, “We’re not going to make hundreds of millions of dollars, but we’ll make a beautiful profit.”
What is happening with Daraprim could not be done with all drugs. So there are lots of other generic drugs that the FDA still must approve, allowing psychopaths like Shkreli to gouge customers — just in a less public way. And in most of those cases, the drugs (which are also generic) can’t be reproduced from compounding businesses. That’s the thing: we don’t have a free market. The bigger companies control the political system and therefore what we call a “free market.” That’s why I bristle at the conservative claims about how “natural” capitalism is.
The other thing that Shkreli went around telling people was that the extra money that he was charging for Daraprim would allow his company to create new drugs. This would have been nonsense if it had been a real drug company like Roche, which actually does research. But the fact that Shkreli uses this line when all he does is collect rents shows that it is all a con. If it weren’t for government funded research, all we’d be getting is longer and longer acting ED drugs.
But there’s no doubt: it is really nice to see Martin Shkreli get screwed in this way. But it also shows that these super rich business types really don’t know much. He was very public with this move — confident in the knowledge that there was nothing that anyone could do. He showed a shocking lack of sophistication when it came to PR. But in the end, he didn’t seem to know that this was a drug that a compounding business could put on the market — not only undercutting him in price but showing him to be a fraud.
We live in the worst of all worlds from an economic standpoint. Where it is to the benefit of the rich, we live in a free market. So there is supposedly nothing we can do about the price gouging of Shkreli. But when a free market would be to the benefit of the poor — as in allowing unlimited immigration of doctors and lawyers — then we live in a very controlled market, because God forbid that the rich would have to compete with others.
So what Imprimis has done is really great. But under most circumstances, it is not possible to do. And the Martin Shkrelis of the world continue to prey upon the weakest people in our society.