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The Big Pharma Mafia:
Your Money Or Your Life

| September 29, 2015

Hedge fund manager Martin Shkreli

Hedge fund manager Martin Shkreli’s decision to raise the price of the lifesaving drug Daraprim from $18 to $750 per pill is emblematic of America’s pharmaceutical industry, where price-gouging is the norm.

By Martin Dyckman

The comedian Jack Benny, generous in private life, cultivated the stage persona of a world-class skinflint. In one of his most famous radio skits, he’s accosted by an armed robber who demands “your money or your life.”

When Benny doesn’t answer, the thug loses patience.

“Look, bud, I said, your money or your life,” he says.

“I’m thinking it over,” Benny replies, as the audience roars.

This comes to mind on reading about the former hedge fund manager, Martin Shkreli, who bought the sole source of the lifesaving drug Daraprim and raised its price from $18 to $750 per pill.

His message, to people with weakened immune systems suffering from the parasitic disease toxomoplasis, was the same:

“Your money or your life.”

In this instance, though, it was no joke.

Initially boastful of his prowess, Shkreli flinched under intense social media and political pressure and announced he would reduce the price, without saying by how much. It can be assumed the big shots of Big Pharma had been screaming at him to back off lest he become the example that finally brings down their entire racket.

But of course his is merely most extreme example of the standard business model of an industry whose ethics invite unfavorable comparison to those of the Mafia.

They charge what they think they can get simply because they can do it. There is nobody and nothing to stop them.

Earlier, the only supplier of cycloserine, a generic drug for a rare and lethal form of drug-resistant tuberculosis, had raised its price from $15 per pill to $360: a mere 24 times the original. The company responded to the resulting outcry by announcing that it would return the rights to the nonprofit that had previously owned them.

context floridaLast month, two manufacturers won government approval for new cholesterol drugs that will cost $14,100 and $14,600 a year respectively.  Unlike Daraprim and cycloserine, those will need to be taken as long as patients live.

Even when life isn’t at stake, medicines seem grossly overpriced in direct proportion to how much people think they need them. The costs of drugs for ED and skin disorders are particularly conspicuous. My dermatologist once recommended one with the caveat that “Insurance will probably pay for it.” I decided to go without rather than ask even the insurance to pay $400 for a tiny vial.

Bernie Sanders, Hillary Clinton and other Democratic politicians not running for president are proposing legislation to control drug costs, which increased by more than $100 per person last year according to The New York Times. Sanders cites a common asthma drug that cost $11 a bottle last year and goes for $434 now and an antibiotic hiked from $20 to $1,849.

Generics, once hailed as inexpensive alternatives, are skyrocketing in the grasp of greedy Big Pharma.

Even people with insurance are getting hammered by larger deductibles and co-pays. My Medicare Part D plan, an AARP franchisee, is raising the annual premium by $115, or nearly 20 percent. They can read it here: Goodbye.

Clinton and Sanders would both allow Americans to import drugs from Canada and empower Medicare to negotiate drug prices for those it insures. Sanders would require companies to go public with their research and development costs while Clinton would require a minimum percentage of corporate income to be spent on research and development and set a $250 limit on monthly copays. Part of Sanders’ program would empower the Federal Trade Commission to sue companies that pay others to keep generic rivals off the market.

Those reforms are good as far as they go, although the chance of any of them passing must be rated worse than poor in a House of Representatives that holds free enterprise in higher regard than the Ten Commandments.

But it may take even stronger medicine to stop Big Pharma’s abuse of its hundreds of individual monopolies. The companies ought to be regulated as public utilities are: That means permitting them only a reasonable rate of return on investment, with suitable allowances for investment in research, development and new production, and reasonable limits on the advertising that shills for us to take costly new – and often dangerous –  drugs for ailments that we didn’t even suspect we have.

The industry’s shopworn defense is that its pricing supports the finest research in the world. But without knowing exactly what they spend, that’s so much snake oil. Moreover, little of it goes to new drugs for rare diseases where the companies don’t see profits to be made.

It really is a question of our money or our lives. Enough is enough.

martin dyckman columnistMartin Dyckman is a retired associate editor of the St. Petersburg Times and author of Floridian of His Century: The Courage of Governor LeRoy Collins. He lives in Western North Carolina.

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10 Responses for “The Big Pharma Mafia:
Your Money Or Your Life”

  1. Lilly VonSchtupp says:

    Golly. I sure hope someone doesn’t kick the ever lovin tar out of Mr. Shkreli…

  2. Samuel L. Bronkowitz says:

    That is a very punchable face.

  3. PCer says:

    I would like to know how many government subsidies these guys are getting to then rake in these huge profits. They dragged Planned Parenthood through the mud yesterday, but let big Pharma get away with murder via price gouging every day.

  4. Geezer says:

    Free enterprise first – screw the needy and sick people.
    Rick Scott + Martin Shkreli = a “bromance” made in heaven.

    Mantra: “drop dead if you don’t like it.”

  5. Lancer says:

    Yes and no. Let’s put the emotions on the shelf…for a second. First, the drug industry has as much to do with public utilities as the state of Florida does with snow. What a horrible, horrible example by the author. He is an admitted socialist (democrat) so I’m sure thinking that doesn’t involve government is difficult.

    Drugs have to be invented, developed and tested…for years and years…before being brought to market. That takes funding, lots of funding, before the product ever goes out. Then, the product has to be marketed to create demand and dispersed. After that, the company has a limited time before it loses control of its patent and the drug goes generic. How does a company recoup the massive funding its already spent, in a relatively short time?

    Now…the author shouts the mating call for do-gooder, government lovers: “We have to do something!”
    Oh yes! The government is listening and here come the democrats…sanders, Clinton, blah, blah, blah. Let’s have government jump headlong into another failed debacle in which they have more power, more control and no understanding or scope.

    Price controls do not work.
    http://www.heritage.org/research/reports/2013/08/legislating-low-prices-cutting-costs-or-care

    While the author and most democrats can’t seem to escape looking at everything in a non-positive light…we are living in a golden age. Tremendous medical advancements have been made in pharmaceuticals in cancer, cholesterol, aids, etc. American lifespans have increased tremendously. “Your money or your life?” is a bogus title. Healthcare is expensive, we spend more in healthcare than every country with the government spending almost 1/2 of it.

    Government has INCREASED costs, people. Instead of ignorantly pandering for more insanity…why not ask this? Could reducing governments scope and power within the industry REDUCE costs?

    Answer: Absolutely, yes it could.

  6. Sherry E says:

    This situation is a very tragic and ugly example of “capitalism” completely spinning out of control. Those that so ardently advocate less government regulation should look closely at exactly what happens when “maximizing profits” over “the common good” is the focus of business decisions in our country. There is no way we should be trusting the 1% billionaires who head up such industries to do the “best thing” for all our citizens!

  7. Ray Thorne says:

    When are we going to realize that these ideas of finding cures is just propaganda. Keeps everyone hopeful though as these pharmaceutical companies get richer. There’s no money in a cure. Ailments keep the money flowing in. It may not be criminal in the eyes of the law but it seems it would take a criminal conscience to keep needed medication from people by suddenly inflating the price to beyond reach.

  8. Lancer says:

    …unless those millionaires and billionaires are leftists.

  9. Sherry E says:

    Most research for the development of new drugs is actually conducted in universities . . . NOT by pharmaceutical companies. Big Pharma actually spends TWICE as much on MARKETING than creating new medicines. This from Science Daily:

    York University
    Summary:
    A new study estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as it does on research and development, contrary to the industry’s claim. The U.S. pharmaceutical industry spent 24.4% of the sales dollar in 2004 on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of US$235.4 billion. The study’s findings supports the position that the U.S. pharmaceutical industry is marketing-driven and challenges the perception of a research-driven, life-saving, pharmaceutical industry.

    Also, Ray. . . your comment is right on! The Pharmaceutical and Medical industries make their massive profits by TREATING us . . . NOT by CURING. There are 2 documentaries on Netflix that could change your lives completely. . . take a look at “Food Matters” and “Forks Over Knives”.

  10. Samuel L. Bronkowitz says:

    Well, color me surprised. Lancer is actually defending raising the price from $18 to $750 per pill by a venture capitalist that bought the rights to a drug, because of liberals or something. Where some people might wish a horrible, painful cancer on him that costs $10,000/daily pill and isn’t covered by his horrible socialist medicare plan, instead, I’m hoping that he seek treatment for whatever mental illness he has that compels him to hate others in the manner that he does. Seriously, dude. Get treatment.

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