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The Almighty Buck Businesses Medicine

Citing 'Moral Requirement To Make Money', Pharma CEO Jacks Drug Price 400% (arstechnica.com) 670

The chief executive of a small pharmaceutical company defended hiking the price of an essential antibiotic by more than 400 percent and told the Financial Times that he thinks "it is a moral requirement to make money when you can." From a report: Nirmal Mulye, CEO of the small Missouri-based drug company Nostrum Laboratories, raised the price of bottle of nitrofurantoin from $474.75 to $2,392 last month. The drug is a decades-old antibiotic used to treat urinary-tract infections caused by Escherichia coli and certain other Gram-negative bacteria. The World Health Organization lists nitrofurantoin as an essential medicine. In an interview with the FT, Mulye went on to say it was also a "moral requirement" to "sell the product for the highest price," and he explained that he was in "this business to make money."
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Citing 'Moral Requirement To Make Money', Pharma CEO Jacks Drug Price 400%

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  • by Anonymous Coward on Wednesday September 12, 2018 @10:22AM (#57297392)

    But maybe it's what they teach at MBA courses.

    Anyhow, time to decommercialise medicine. Yes, I know it sounds pinko commie socialist. Even so.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      But maybe it's what they teach at MBA courses.

      Anyhow, time to decommercialise medicine. Yes, I know it sounds pinko commie socialist. Even so.

      Why do you think markets can't correct this type of behavior?

      "Goodwill" is also an asset - one that's actually quite valuable.

      This CEO just shat all over whatever goodwill his company had.

      • by layabout ( 1576461 ) on Wednesday September 12, 2018 @10:59AM (#57297842)
        Markets can't correct this behavior because drugs are effectively a monopoly situation. Not just from the patent perspective but from the biological. When treating a condition, it's not uncommon to find that a patient can't tolerate one drug but can another. A classic example of this is statins. The protocol for using statin says if a patient can't tolerate the cheap ones, gradually try the increasingly more expensive ones until you find one that works. If the patient can only tolerate one particular drug to treat a condition, there is no market (i.e. only one supplier, the drug that works). The only power the patient has is to decide whether or not to treat the condition. There is no way the patient can put any pressure on the drug manufacturer to change pricing. If anything, the drug manufacturer is saying "you want to live? Don't ask about the price, just pay it."
        • by alvinrod ( 889928 ) on Wednesday September 12, 2018 @11:53AM (#57298484)
          Drugs are effectively a monopoly situation due to government intervention. First, government agencies regulate what can and can't be sold as a drug. There may be a perfectly good medicine that already exists and is being sold in other countries, but if it's not FDA approved, you may be SOL. It's illegal for anyone to sell that medication to you. Second, governments enforce intellectual property rights which create a monopoly. The countries that don't respect or enforce these IP rights can churn out some of these $2,000 medicines for under a dollar. The process for extending (or granting new) IP rights for minor changes to a drug's chemistry is also abused, which can create perpetual monopolies.

          You can't claim that markets fail to correct for a behavior when a government has made it explicitly impossible for them to do so. It's no more fair that the conservative argument that government can't work effectively after it's been defunded or otherwise crippled. If you violate the preconditions, there's no guarantee of the postconditions. That much should be obvious regardless of context.

          I'm not suggesting that we need a completely laissez-faire system where anyone can sell whatever they want as medication either. You don't need to have a system of pure government control or a complete lack of it. However, you can't make it illegal for competition to exist or make it insanely expensive to certify medications without expecting the prices to be high.
          • by bondsbw ( 888959 ) on Wednesday September 12, 2018 @12:48PM (#57299048)

            However, you can't make it illegal for competition to exist ... without expecting the prices to be high.

            Yes we can. We regulate them.

            What we can't do is assume the free market will sort out a situation when we can't allow free market conditions.

            I love free market competition. It works in the vast majority of economic situations. But it cannot work for markets we must heavily regulate and we shouldn't try to force it.

      • Re: (Score:3, Insightful)

        by Sperbels ( 1008585 )

        Why do you think markets can't correct this type of behavior?

        Because the notion that the market can fix everything isn't real and is akin to a religious belief.

    • by fishscene ( 3662081 ) on Wednesday September 12, 2018 @10:47AM (#57297696)
      I reckon the same logic can be applied for taxes for this company too. It's a moral requirement for the federal government to make money.. by jacking up your corporate taxes by 400%.
      • by lgw ( 121541 )

        Corporate taxes are just passed on to the consumer. If he can get away with increasing prices by 4x, he can get away with keeping the same profits after taxes at an even higher price.

        Corporate taxes are a feel-good measure that don't accomplish much (beyond incentivizing companies like Apple not to spend their profits in the US).

        OTOH, if the government hadn't granted him a monopoly in the first place, he wouldn't be harming anyone by his desire for profit. Maybe that's where you should direct your ire.

      • Legitimate business transactions make money because a legitimate business transaction is a benefit to both buyer and seller. The seller sells the item because he's being paid more than it cost him to make or acquire. The buyer buys the item because it's worth more to him than the price that's being charged. That is, legitimate economic transactions are positive-sum.

        Taxes transfer money. And inefficiently at that (you have to pay someone to calculate the taxes, pay to make the payment, and pay someone
    • by Calydor ( 739835 ) on Wednesday September 12, 2018 @11:05AM (#57297920)

      No, this is just how a sociopath thinks. Quite literally, a sociopath thinks that anything that benefits him (regardless of what happens to the rest of the world) is morally right.

    • It'sa fiduciary requirement though.

    • by Thelasko ( 1196535 ) on Wednesday September 12, 2018 @11:22AM (#57298126) Journal

      Anyhow, time to decommercialise medicine. Yes, I know it sounds pinko commie socialist. Even so.

      The market is working to correct this behavior. [washingtonpost.com] Remember, there are intermediaries between the drug companies and the patients. They're pissed off too.

      • by Sperbels ( 1008585 ) on Wednesday September 12, 2018 @11:40AM (#57298356)
        Yay, the fuckers who charged me $50,000 to have my appendix removed will rescue us from the price gouging pharmas.
      • The market may temporarily correct it, but greed always wins out in the absence of effective regulatory infrastructure.

        Remember, for the record, that Adam Smith was *not* in favor of unbridled capitalism, the 'laissez-faire' that is so often touted in his name. In fact, if you read either The Wealth of Nations or The Theory of Moral Sentiments, you'll find that he laments the various bad acts done in the name of pure profit, and enjoins his readers to act well and to take such measures as may be necessary

    • No, I got an MBA and they didn't teach that either.
      They did teach selling a product at a fare market value, and not to short sell your product and putting yourself in a race to the bottom. They also taught that it is difficult to raise a price of a product too much without the customers getting pissed and switch to alternatives.

      I also took my MBA post Enron, so there was also a lot more emphasis in ethics. So much of this nonsense that these guys do was actually discouraged.

      I think the guy in this story is

  • sad (Score:5, Insightful)

    by fluffernutter ( 1411889 ) on Wednesday September 12, 2018 @10:26AM (#57297434)
    The sad part is, if making money can be called a "moral requirement", apparently it is more important than the truly moral cause of healing as many people as possible.
    • Not really. If a company is not profitable they will go out of business and whatever they are making will be unavailable.
  • He's not wrong (Score:5, Insightful)

    by rsilvergun ( 571051 ) on Wednesday September 12, 2018 @10:27AM (#57297442)
    if you accept the premise of private, for profit insurance as a means to access medicine and healthcare and that these companies will be privately traded companies with shareholders then yes, that's where the moral imperative lies. This is one of the consequences of such a system.

    We already know the solution is single payer healthcare. We can see it working in a dozen countries. The question is will we swallow our pride long enough to vote the sorts of people in that'll give it to us?
    • He has a legal obligation to the shareholders. Calling it a moral obligation is a strange choice of words.
      • There's no legal requirement to make money. It's necessary to do so for a CEO to keep his job, generally speaking, but there is no legal requirement.
      • Agreed.. I feel like someone should tell him, "That word..I do not think it means what you think it means".

    • Re:He's not wrong (Score:5, Interesting)

      by fluffernutter ( 1411889 ) on Wednesday September 12, 2018 @10:37AM (#57297582)
      Canadian here. Most people love our health care system and will fight to keep it. Yes there are some downsides, like some longer waits. Yet people who really need it do get care immediately. It's not really as bad as the vocal minority make it sound. Don't just take my word for it. [youtube.com]
      • Re:He's not wrong (Score:5, Interesting)

        by Pulzar ( 81031 ) on Wednesday September 12, 2018 @11:40AM (#57298358)

        Canadian here. Most people love our health care system and will fight to keep it. Yes there are some downsides, like some longer waits. Yet people who really need it do get care immediately. It's not really as bad as the vocal minority make it sound.

        As someone who's lived in both places, I can tell you that the biggest downside of Canadian system over US is all the times where you'd really like to get care right away, but you're not going to die if you don't. *That's* the stuff that really sucks in Canada.

        Emergency room visits where you're not bleeding out on the floor, or finding an obstetrician when you get pregnant that's not an hour away, finding a specialist to listen to your baby's heart when it sounds a little off, father needing a hip replacement... With all of those, I've had bad experiences in Canada.

        In US, if I need a doctor, I can almost always find one the next day, or next week if it's a really unique case. It absolutely sucks having to deal with insurance, costs, and so on, don't get me wrong.... but it is nice to know that I can see someone quickly when I need help.

        Both sides need improvement, and Canadian system is a much better starting point... but it's not all roses up there either :(.

        • by sinij ( 911942 )
          Now to be fair list downsides of US system, where you are seen immediately but go bankrupt if it is anything serious and long-term.

          The key advantage of Canadian system is that your health care is not tied to your ability to pay.
    • by DrTJ ( 4014489 )

      One definition of moral:
      "concerned with the principles of right and wrong behavior and the goodness or badness of human character."
      Another definition:
      "holding or manifesting high principles for proper conduct."

      I would not put "making money" into the category of "high principles". Usually it is the high principles that give way for "making money". Regarding "goodness or badness of human character"; is amassing capital for the shareholders a sign of a good character of a human being? Is it an example of a hum

    • In reality, for-profit insurance companies have a vested interest in drug prices being kept in check, because it gets harder to sell people policies when they're stuck increasing their rates sufficiently to cover these inflated medication prices!

      One of the negatives of single-payer healthcare is that it would be funded from taxpayer dollars, meaning as per usual -- central government lacks motivation to keep the costs down. Since they don't have to show a profit on THEIR books, they simply find other avenue

  • by fredrated ( 639554 ) on Wednesday September 12, 2018 @10:28AM (#57297462) Journal

    the stench of evil.

  • by PPH ( 736903 ) on Wednesday September 12, 2018 @10:29AM (#57297470)

    So, no patents? Simple solution: contract with some other drug makers to duplicate it.

    As much of the money to buy these drugs comes out of the public's pocket, perhaps it would be a better idea to invest public funds in the supply chain up front. Set up a gov't funded manufacturing unit to produce orphaned drugs and steer around patents on things like EpiPens.

  • by Kohath ( 38547 ) on Wednesday September 12, 2018 @10:29AM (#57297472)

    There are no patents on this. It's an old medication. What keeps other companies from selling exactly the same substance? Answer: Government regulation.

    Government needs to do more to help more companies make these medicines at reasonable prices.

    • Re: (Score:3, Informative)

      by Anonymous Coward

      What keeps other companies from selling exactly the same substance? Nothing; Actavis Labs FL INC, Impax Labs INC, Mylan, Novel Labs INC, Sun Pharm Industries, and Zydus Pharms USA INC are all manufacturers of generic nitrofurantoin.

      • by ItsJustAPseudonym ( 1259172 ) on Wednesday September 12, 2018 @01:25PM (#57299432)
        In some previous instances of generic drugs, the situation has been that only one company is granted the license (or permit?) by the FDA to market the drug to treat a certain condition. Basically, anyone can produce drug 'X', but only one company can produce 'drug X permitted to treat ailment Y'. This nearly creates a monopoly for the treatment of ailment Y, because no other versions of X are permitted to treat Y, and there are either no other generic drugs other than X that could treat Y.

        I suspect that is what's happening here, and that is why this guy can jack the price of his generic drug.
    • What government regulation? If there's no patent, I would think other companies are free to make it if they so choose. I'm no expert, though, so if you can point to the regulation in question, I'd appreciate it.
    • by ceoyoyo ( 59147 ) on Wednesday September 12, 2018 @11:06AM (#57297930)

      Other companies do sell exactly the same substance. This appears to be an example of a company taking advantage of either (a) consumer gullibility where brand names are concerned or (b) corrupt physicians.

      Although from the article it sounds like the competition might be cranking the price up as well, so perhaps it's (c) collusion.

      In the rest of the world, apparently actual government regulation successfully keeps the price between $0.10 and $10.

  • by Applehu Akbar ( 2968043 ) on Wednesday September 12, 2018 @10:29AM (#57297476)

    Actually it was I, not Ms Mash, who posted this story.

    I’m always amoused when these low-budget shkrelis claim to be defenders of the free market when they make insane price moves. If we actually did have a free market in pharma, we would be able to fill our prescriptions for this compound at the world market price of $18, as per the closing line that was oddly edited out of my post.

    The only way price increases like this can be made to stick is to have the FDA on your side, preventing us from being able to compete. Time to rip out the FDA’s ability to keep competition out of the market. Let it manage testing, not price manipulation.

    • internationally is that you're buying from countries that have single payer healthcare and therefore can negotiate much, much better drug prices than private insurance companies can/do.

      The free market doesn't solve drug prices. There really is only one solution and it's single payer. Healthcare doesn't work like traditional goods because a) unless you have an 8 year degree you lack the necessary information to make informed purchase, b) it's a matter of life or death, meaning you can't really shop aroun
      • by ooloorie ( 4394035 ) on Wednesday September 12, 2018 @11:44AM (#57298408)

        internationally is that you're buying from countries that have single payer healthcare and therefore can negotiate much, much better drug prices than private insurance companies can/do. The free market doesn't solve drug prices.

        You can buy generic Nitrofurantoin in the US for $15 for 14 capsules. That's what the free market provides.

        The reason American insurance companies pay $2800 for the same treatment is because under the ACA, they can get away with this crap and maximize their profits.

        There really is only one solution and it's single payer.

        The US has a large single payer system and it is horrendously inefficient. If you want to use single payer to lower drug prices, you need European-style nationalized healthcare.

  • Yep (Score:5, Insightful)

    by American AC in Paris ( 230456 ) on Wednesday September 12, 2018 @10:29AM (#57297480) Homepage

    This is exactly how for-profit industries work.

    Maybe instead of trying to find ways to make for-profit healthcare marginally less of a roiling tire fire for Americans, we should instead nationalize healthcare, like the rest of the civilized world.

    :|

  • by haibane ( 4907639 ) on Wednesday September 12, 2018 @10:30AM (#57297494)
    moral (môrl, mr-) adj. Of or concerned with the judgment of the goodness or badness of human action and character: moral scrutiny; a moral quandary. adj. Teaching or exhibiting goodness or correctness of character and behavior: a moral lesson. adj. Conforming to standards of what is right or just in behavior; virtuous: a moral life.
    • Not everyone agrees on what constitutes moral behavior. There are some people who consider me immoral because I don't pray to their sky fairy, and even a few who would believe that it's perfectly moral for them to kill me for speaking ill of their sky fairy. If you looked at the entire world's population, the majority probably consider the behavior that I just described as moral.

      I don't consider "making money" to be a moral requirement personally, but if someone wants to use that as the basis for their b
  • Ok... decades old drug, these guys are taking advantage of a government-mandated monopoly (patent) that turned into a natural monopoly - US patent exclusivity is seven years [fda.gov]. FDA needs to create a process to automatically institute a fast-track for generic competition in cases like this where a drug's price is increased by over a defined threshold (100%?). The resources required to staff such fast tracking should be recoverable in reduced cost to Medicare/Medicaid/etc. Let the Pharmacy Benefit Managers p

  • by Rick Schumann ( 4662797 ) on Wednesday September 12, 2018 @10:31AM (#57297500) Journal
    That's what we should be doing with assholes like these that pull shit like this.
  • by smooth wombat ( 796938 ) on Wednesday September 12, 2018 @10:31AM (#57297510) Journal

    I seem to recall some orange-faced liberal from New York City telling us he'd force drug companies to lower the price of their drugs. You know, use the power of big government to dictate to private companies how they should run things.

    He wasn't lying when he said that, was he?

    • I seem to recall some orange-faced liberal from New York City telling us he'd force drug companies to lower the price of their drugs. You know, use the power of big government to dictate to private companies how they should run things.

      He wasn't lying when he said that, was he?

      Hmm; he doesn't look [google.com] orange to me ... sure you don't have some latent hidden subcutaneous dog whistling racism there, buddy? ;)

  • Big Pharma is extremely corrupt. This is just the tip of the iceberg that will be exposed later this year / next year.

    Placing profit above people's life & health is immoral. How much profit is "enough" ?

    --
    Main St. built America
    Wall St. robbed it.

  • Some argue that it is already the case for people who feed off of the misery of others and through the profiteering acts of assholes like this guy their numbers are ever increasing. It won't even need to ba a majority before the backlash comes because at some point a significant is going want to hold these assholes accountable whatever the majority thinks.

  • Common myth (Score:4, Informative)

    by Sarten-X ( 1102295 ) on Wednesday September 12, 2018 @10:35AM (#57297560) Homepage

    It is a recurring myth that corporations are somehow absolutely required by law to seek profit. It seems now is a good time to mention that this is absolutely not true. Corporations are only required to do what their charter says, which usually includes some notes about profit, but also more importantly defines the role the company will take (like improving healthcare).

    This CEO is avoiding the legal implication by claiming it's a "moral" requirement. Of course, that means there's no written guideline to which we can refer that will identify this as blatant greed, so it becomes a matter of personal judgement. I hope that's remembered in the future whenever the CEO tries to claim he's always acting in the public interest.

  • The CEO has a fiduciary obligation by law to provide the most value to his shareholders. If the market will pay a 400% increase, he's doing his job.

    Except when it comes to the demand curve in health, the fcuker goes vertical.

    Is this right? No, and it's why I believe we're going to see big pharma get a bloody nose one of these days especially in regards to antibiotics which are quickly becoming useless in the face of common diseases.

  • by RonVNX ( 55322 ) on Wednesday September 12, 2018 @10:42AM (#57297646)

    You know, the government knew all about Shkrelli's crimes before he raised the price of that drug. And then he got known for being an asshole that raised a generic drug's price in this same way, forcing the government to do something about him. Congratulations, Nirmal Mulye, you've just made yourself very interesting to the FBI.

  • When are we going to start? It's been too long already.
  • by FeelGood314 ( 2516288 ) on Wednesday September 12, 2018 @10:48AM (#57297710)
    Patents have never been to spur innovation. Their purpose is to preserve knowledge. We as society decided we would trade a limited monopoly on an invention for the complete description of that invention. The invention was supposed to be innovative such that any other person knowledgeable in the craft would say "hey, that's a really good idea, I can use that". I should want to read patents because they would teach me, they should be a resource when I want to solve a problem. Journalists should publish them in trade journals because of the innovation in them.

    Inventors will invent because we want to solve problems, because there is profit in providing solutions to our customers. We don't need patents to do that. (and we don't need drug patents either - our way of developing drugs is wasteful and broken)

    Today when someone actually comes up with something innovative they often don't patent it. Manufacturing methods, if they are truly useful are rarely patented. Small companies can't defend a patent and any inventor who is altruistic will publish their idea almost anywhere other than the patent office. Not only are patents now unreadable (I can't make any sense of any of the patents my name is on) but we are told not to read them because it might increase our companies liability.

    When companies spend more money on patent lawyers than on new product development (Apple, google, Oracle) or get screwed when they don't (RIM/Black Berry) we have a problem.

    It is now your moral duty to shun East Texas and actively fight patent laws.
    • by CAOgdin ( 984672 )

      Your assessment of the reason for Patents is misguided and misinformed. Patents exist to reward inventors with a limited-time frame during which they can maximize their revenue from the product of their works, by providing an alternative stream of income from licensing of the patent to others. And, it still functions that way.

      Only vain people seeking self-satisfaction apply for a patent they don't intend to turn into income.

      And, that arcane language is a tool used by attorneys to make the application suff

  • by Fly Swatter ( 30498 ) on Wednesday September 12, 2018 @10:59AM (#57297840) Homepage
    This is their goal, to siphon all money they can out of the working class and into the hands of the already rich without consequence for any harm that happens along the way. That is how they stay rich. And like morons we allowed corporations to become these unstoppable money siphoning machines. Good luck fixing this in a peaceful way this since the corporations now own your governments and make their own laws.
  • by jenningsthecat ( 1525947 ) on Wednesday September 12, 2018 @11:04AM (#57297918)

    I'd love to have that guy locked in an airtight room. "I can sell you some air - it only costs $5000 per litre, cash up front." "But, but... I don't have that much cash on me!" "Well, I'm sorry sir, but it's a moral imperative for me to make as much money as I possibly can. Ten thousand people who suffered badly because of your drug-price gouging want to do a group buy of all these air tanks. Unless you can beat what they're offering, I'll have to sell it all to them - it's just the right thing to do!"

  • by CAOgdin ( 984672 ) on Wednesday September 12, 2018 @11:07AM (#57297946)

    There are dozens of other manufacturers of this same medication (see https://www.pharmacompass.com/... [pharmacompass.com]), and four newer alternatives to this medication that are more widely prescribed (https://healthplans.providence.org/providers/news-and-events/provider-enews-archives/older-articles/uti-drug/).

    Basically, this CEO wants to get out of this highly-competitive marketplace, but is too stupid to just shutdown it's manufacture and sell all remaining stock of the product.

    I love it when incompetent people try to boost their personal wealth, but slit their own throats in the bargain.

  • This sort of complete market capture for unlimited periods needs to die.

    Rework the system to give these companies 10 years of sole manufacturing rights.
    Then 10 years of royalties on their drugs being mass-produced across the industry.
    After that, let competition decide the winnner.
    And if someone hits this sort of market capture, it then behooves competitors to produce their own brand, driving prices back down.

    Because this shit is insane.

  • by Dog-Cow ( 21281 ) on Wednesday September 12, 2018 @11:13AM (#57298020)

    It's just as moral to shoot the CEO in the head. After all, saving millions of people money is the moral thing to do, right?

  • There are no remaining patents on this, surely? So how does he keep a competitor from starting to sell this for a lower price?
  • The drug is a decades-old antibiotic...

    If it's decades old, then it must not be patented. Why isn't a competitor beating the living shit out of them?

    Or to put that another way, maybe this company happens to charge that much, but what does it actually cost a user buy?

  • by WillAffleckUW ( 858324 ) on Wednesday September 12, 2018 @01:19PM (#57299378) Homepage Journal

    It's a legal requirement to make money, not a moral requirement.

    Jesus said to help the poor and become fishers of men, not banksters.

  • by wolff000 ( 447340 ) on Wednesday September 12, 2018 @02:10PM (#57299894)

    Almost all major world powers limit the amount drug companies are allowed to charge. This is exactly why! I don"t give a shit about freedom or capitalism when it comes to life-saving procedures and medicines. This should be illegal and no one should make a profit on suffering. People that think this is acceptable are garbage people, in my opinion.

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