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Pharma price gouging...

Old 08-18-2016, 05:56 AM
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Default Pharma price gouging...

The price of an Epi-Pen has increased by almost 500% over the last few years. From less than $150 in 2008 to over $500 now...it seems that the only company that makes them(Maylan)no longer has any competition. I understand the cost of R&D is huge...but they've recouped that expense a hundred-fold.
Rarely have I seen such a blatant case of corporate greed.
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Old 08-18-2016, 06:09 AM
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Would you prefer that the company goes out of business? These companies have huge overhead, regulatory, research, etc. They have many products that do not work out. It sounds like gouging, but there is one thing to remember- these companies are in a very shaky situation. If they don't make huge money on the products that are profitable, they go out of business.
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Old 08-18-2016, 06:22 AM
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Originally Posted by Time Machine View Post
Would you prefer that the company goes out of business? These companies have huge overhead, regulatory, research, etc. They have many products that do not work out. It sounds like gouging, but there is one thing to remember- these companies are in a very shaky situation. If they don't make huge money on the products that are profitable, they go out of business.
Think about what you just said. If the Epi-Pen was the ONLY product made by Mylan, then your statement holds some merit.
But it isn't. The only other company that made this had a recall last year, and as a result Mylan holds a monopoly on it.
I am all about profit and recouping expenses invested in R&D(which is one of the largest expenditures with pharmaceutical companies), but they've made enough profit over the lifetime of the the drug to pay for that several times over.
This is brazen price-gouging, brought on by the lack of competition.
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Old 08-18-2016, 06:27 AM
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yeah there's an issue here and I don't know what the solution is

its obvious some of these companies are taking advantage
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Old 08-18-2016, 06:29 AM
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If prices have risen that much recently I would expect a generic version to be out soon. This is the best way for the market to correct itself.
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Old 08-18-2016, 06:33 AM
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Originally Posted by Wolakrab View Post
...but they've made enough profit over the lifetime of the the drug to pay for that several times over.
"They've made enough", or have they?.

If it's so "profitable" another company will/would come up with a cheaper version.

Market forces will dictate that.
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Old 08-18-2016, 06:37 AM
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Originally Posted by Esuomm1 View Post
"They've made enough", or have they?.

If it's so "profitable" another company will/would come up with a cheaper version.

Market forces will dictate that.
Exactly. If you could go out an make a product significantly cheaper, gain market share, and make a profit, multiple manufacturers would be jumping into the market.

Unfortunately, prices were artificially low for some time due to increased competition, and recently many have dropped out due to lack of profit causing shortage and big price increase. The market has recently started to correct a little, but it's not enough.
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Old 08-18-2016, 06:40 AM
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Originally Posted by Wolakrab View Post
Think about what you just said. If the Epi-Pen was the ONLY product made by Mylan, then your statement holds some merit.
But it isn't. The only other company that made this had a recall last year, and as a result Mylan holds a monopoly on it.
I am all about profit and recouping expenses invested in R&D(which is one of the largest expenditures with pharmaceutical companies), but they've made enough profit over the lifetime of the the drug to pay for that several times over.
This is brazen price-gouging, brought on by the lack of competition.
They may have made enough to recoup the cost of the Epi-pen R&D but what about all the other failed drugs that may have been in their pipeline that never made it to market, the R&D for those needs to be paid for with drugs that are currently in the market. I agree it looks like gouging on the surface, but what was holding the cost down and not allowing them to potentially recoup money on other products that didn't make it to market was the competition, now that it isn't there they are able to bring more profit in to make up for that other R&D.

Pharmaceutical products are exorbitantly expensive for drug companies to produce, it takes an average of 12 years for a new product to make it to market, that's 12 years of expenses for just one product and most companies are working on numerous products at once. Brand drugs have a very limited window to make their money back before their patent runs out and then it's opened for generics.

Another generic will fill this role, but it too will take time to get through the approval process.
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Old 08-18-2016, 06:43 AM
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We have a bunch of customers in that field and the length of time plus the total cost of getting FDA approval, even for a generic drug, is astounding. It took one of our customers over a year just to certify a new dose size of an approved drug.

So if there's a profit to be made I would assume some drug company is working on that product but it's not going to happen over night.
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Old 08-18-2016, 06:51 AM
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Gouging?

They are not doing it right.

6.5% profit margin.

https://ycharts.com/companies/MYL/profit_margin

Did you post from an Apple product?
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Old 08-18-2016, 06:57 AM
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Originally Posted by Wolakrab View Post
Think about what you just said. If the Epi-Pen was the ONLY product made by Mylan, then your statement holds some merit.
But it isn't. The only other company that made this had a recall last year, and as a result Mylan holds a monopoly on it.
I am all about profit and recouping expenses invested in R&D(which is one of the largest expenditures with pharmaceutical companies), but they've made enough profit over the lifetime of the the drug to pay for that several times over.
This is brazen price-gouging, brought on by the lack of competition.
That's not how it works though. The money goes into a big pot, and out of the pot they pay for all the looser products that do not sell, and the regulatory burden, which is HUGE. So if they do not make some huge money on the few products that they do make money on, they have no way to offset the products that loose money.

It's a tough business to survive in, and all the mergers you hear about is basically companies that are no longer viable being bought up.
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Old 08-18-2016, 07:01 AM
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Originally Posted by soccerguy83 View Post
They may have made enough to recoup the cost of the Epi-pen R&D but what about all the other failed drugs that may have been in their pipeline that never made it to market, the R&D for those needs to be paid for with drugs that are currently in the market. I agree it looks like gouging on the surface, but what was holding the cost down and not allowing them to potentially recoup money on other products that didn't make it to market was the competition, now that it isn't there they are able to bring more profit in to make up for that other R&D.

Pharmaceutical products are exorbitantly expensive for drug companies to produce, it takes an average of 12 years for a new product to make it to market, that's 12 years of expenses for just one product and most companies are working on numerous products at once. Brand drugs have a very limited window to make their money back before their patent runs out and then it's opened for generics.

Another generic will fill this role, but it too will take time to get through the approval process.

Beat me to it
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Old 08-18-2016, 07:03 AM
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Originally Posted by Big Island Lifer View Post
If prices have risen that much recently I would expect a generic version to be out soon. This is the best way for the market to correct itself.
markets can't work properly with monopolies
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Old 08-18-2016, 07:07 AM
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this isn't a black and white "free market" issue there are way to many stories like this

J. Michael Pearson is the CEO of Valeant Pharmaceuticals International, a company known for buying up drug patents and then jacking up the prices. He made over $10 million in compensation last year, between his salary and stock options.

Under Pearson's leadership, a drug used to treat a rare liver disease has risen in price from $4,000 a month to $44,000 per month, which is not only immoral, it ought to be entirely illegal.
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Old 08-18-2016, 07:09 AM
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Originally Posted by willie g View Post
markets can't work properly with monopolies
If there is money to be made on that product, you can be sure that there are people trying to figure out how to make it. If the market is too small, then the business decision on whether or not to take the risk will be a no.
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Old 08-18-2016, 07:15 AM
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Originally Posted by Time Machine View Post
If there is money to be made on that product, you can be sure that there are people trying to figure out how to make it. If the market is too small, then the business decision on whether or not to take the risk will be a no.
use the op's story, if there wasn't money to be made at $150.00 per month it would have never been offered at that price. Once they created a demand via marketing and a patent then the jacked up the price, thats bullshit. is some cases this is life or death medications
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Old 08-18-2016, 07:20 AM
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Sister in law worked at a large pharma for about 15 years, dream job, 90k for answering phones and sending samples. 5 weeks vacation, bonus, flex time, telecommute, vig for just about everything under the sun, but she did lose her job when a couple of patents ran out.
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Old 08-18-2016, 07:21 AM
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Originally Posted by Time Machine View Post
That's not how it works though. The money goes into a big pot, and out of the pot they pay for all the looser products that do not sell, and the regulatory burden, which is HUGE. So if they do not make some huge money on the few products that they do make money on, they have no way to offset the products that loose money.

It's a tough business to survive in, and all the mergers you hear about is basically companies that are no longer viable being bought up.
Mylan stock has gone from $21.46/share in 2011 to over $48/share now.
I'd say they are doing very well.
Their philosophy of charging exorbitant prices is working.
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Old 08-18-2016, 07:23 AM
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Other company had a recall, went out of business. Probably had lawsuits as well which killed them. Now, need to build in the prices for next set of lawsuits....
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Old 08-18-2016, 07:25 AM
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My ex and I had this same convo, ended up just getting them online from Canada $150.
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