The Journal of the American Medical Association has a good paper on how to deal with sociopaths exploiting regulatory arbitrage opportunities to screw people over on generic drug pricing:
Current policy already permits the agency to move up in the queue applications for generic drugs that “could help mitigate or resolve a drug shortage and prevent future shortages.”4 FDA should recognize that addressing monopolistic conditions that give rise to sudden price hikes is a means to “prevent future shortages.”…
FDA should consider temporarily permitting compounding of the drug at issue. Compounding is the creation of medications from individual ingredients under the supervision of a pharmacist but outside of the FDA drug approval process….
A second option is to temporarily permit the importation of drug products reviewed by competent regulatory authorities and approved for sale outside the United States. For example, Glaxo, the original manufacturer of pyrimethamine, sells a version of the drug approved for use in the United Kingdom at less than $1 per tablet. FDA has used similar measures during drug shortages, including a temporary importation in 2012 during a shortage of the key anticancer agent doxorubicin.
If those tools are known to be in the FDA’s tool bag, they should act as a deterrent to most sociopaths who want to create opportunistic and temporary monopolies which can then be used to squeeze the public of every possible penny for a year or more. Instead, the window to squeeze would be a week or two in most cases. And that window is not long enough to compensate for the horrendous press and bad faith reputation the squeezing company now would have acquired.
Steps like this increase competition, improve the public wellbeing and increase social surplus while being extremely anti-current business. They are also steps that can mostly be taken by administrative action when there is a White House that wants to actively bend the cost curve.
Gin & Tonic
Unfortunately, compounding pharmacies are very loosely regulated, with, sometimes, very bad outcomes.
Roger Moore
@Gin & Tonic:
There are definitely potential problems with compounding pharmacies, but I don’t know of another example anywhere close to that. They’re definitely only supposed to serve local clients, rather than selling across state lines.
Zinsky
Castration with a dull butter knife would seem to be the correct punishment in these cases.
Richard Mayhew
@Gin & Tonic: Agreed, the Massachusetts fungus example is an excellent counter-argument but as a short term oh-shit response, it is a viable threat
Richard Mayhew
@Zinsky: Prevention rather than punishment, but I agree with your punishment
Wag
@Gin & Tonic:
The actual article offers a very balanced approach to compounding pharmacies, one which balances the risk of limited oversight of the compounding pharmacy industry with the risk of outrageous price increases of generic medications.
Wag
are all comments going in to moderation? I think I included naughty words like Ph arma cy
Wag
thanks for releasing me!
Mnemosyne
@Gin & Tonic:
Depends on the state — California has pretty tight restrictions on such places. G was the warehouse manager for one (before he got laid off) and they spent a lot of time explaining to patients who moved to another state why they couldn’t ship across state lines.
Also IIRC somebody said a few weeks ago that the FTC should have more power to regulate prices than the FDA does, but I’m not sure what the current law says about pharma prices.
Mnemosyne
@Wag:
The last time we used one of those places was when we had a dying cat and the vet sent us there to get a steroid mixed with salmon oil to try and coax the cat into taking it. (Didn’t work, but it wasn’t the fault of the formula, she was just a very stubborn cat.) They’re very helpful and necessary if you need a small, specialty batch of something, but they just can’t do large-scale production.
Major Major Major Major
So, pardon my ignorance of the matter at hand, but why can’t/didn’t we do something like this to that Shkreli asshole?
EDIT: Not *to*, but in order to mitigate such assholery
Punchy
Compounding drugs aren’t often covered by health plans. I was told that if I let the pharmacist compound 2 creams together, I’d be on the hook for 100% of the cost for both; insurance wont cover a penny. If I purchased the creams in seperate tubes and mixed them at home, I’d owe about $8….combined.
Just ridiculous. Even the pharmacist was disgusted by this.
Mnemosyne
@Major Major Major Major:
As far as I can tell (and IANAL), it’s a workaround that MIGHT hold up in court, but no one is really sure.
What we really need is more and better regulations, but good luck getting that through our Do-Nothing Congress.
jl
The experts on it at one of the places I teach say the MA fungus situation was a massive regulatory failure that could not happen in most states.
Drug shortages are a growing problem, not only due to surpergeuius entrepreneurial sociopaths on the verge of bankruptcy and indictment, but more due to modern pharmaceutical supply chain issues. Many generics are produced at only one or two plants in the world and any number of issues can shut down any one at any time. If there is one, then no drug for a while, if there is only two then an instant monopoly for the remaining plant.
The problem is becoming severe, and remedies are needed. At least it is becoming severe enough that dealing with unexpected drug shortages for life saving drugs is now part of medical and pharmacy school curriculum.
jl
In Moderation due to forbidden words. Let’s see if I can find them all.
The experts on it at one of the places I teach say the MA fungus situation was a massive regulatory failure that could not happen in most states.
Drug shortages are a growing problem, not only due to surpergeuius entrepreneurial sociopaths on the verge of bankruptcy and indictment, but more due to modern ethical d r * g supply chain issues. Many generics are produced at only one or two plants in the world and any number of issues can shut down any one at any time. If there is one, then no drug for a while, if there is only two then an instant monopoly for the remaining plant.
The problem is becoming severe, and remedies are needed. At least it is becoming severe enough that dealing with unexpected shortages of life saving drugs is now part of medical and f * r m * see school curriculum.
enon
They are also steps that can mostly be taken by administrative action when there is a White House that wants to actively bend the cost curve.
well, that’s kind of the issue, isn’t it.. because sanders is the only one who would want to actively bend that cost curve.
Richard Mayhew
@Mnemosyne: No, they can’t do large scale, but the drugs in question are 5,000 recipients per year or less. For a short bridge, compounding could be a sufficiently viable threat to temporary profits that would result from a pump and dump operation.
Richard Mayhew
@Major Major Major Major: have to change a couple sets of regulations to make it work and each regulatory change needs time to get developed, 60 day comment period, and then response to the comments; A medium size federal regulatory tweak takes 9 to 12 months in a best case scenario
Richard Mayhew
@enon: Bull — the Obama administration has done a lot to bend the cost curve as a % of GDP, and going forward, the FTC is working hard to keep provider consolidation in check.
Roger Moore
@jl:
My impression is that a big underlying problem is that there are substantial up-front costs, both in money and time, to setting up a drug production line, largely related to regulatory compliance. For generic drugs that sell in large volume, that isn’t a big enough barrier to entry to prevent real competition. But for generic drugs that sell in limited quantities, there isn’t enough money to keep many manufacturers in business. If the market drops to just one producer and they decide to start price gouging, it may take a year or two for another producer to get into the market, and there’s the implicit threat that the gouger can reduce prices and run them out of business. I don’t see a really good solution other than price controls for drugs with limited numbers of producers, because the regulatory demands are actually reasonable.
Mnemosyne
@jl:
Quite frankly, I think the government may end up having to take over drug production of basic stuff like generic antibiotics at some point. A couple of years ago, G’s company almost came to a standstill because there was a production problem with sterile water. Yes, water. It sounds ridiculous, but the one company that makes it had a contamination issue, and nobody could get sterile water for months.
J R in WV
Richard,
I’ve got an interesting true facts story about drug pricing and insurance. Background: Mrs J is a Medicare patient with a supplemental policy partly funded by her former employer. She became total and permanently disabled some years ago, and then when she passed 65 things changed some.
She has been prescribed a maintenance medicine called for purposes of this story Compound S, which is not a generic, but which has been in use for many years. The co-pay for a 90 day supply with her supplemental insurance policy is around $550.
At her last appointment with her Dr who prescribed that medication, she mentioned the expense of the med, and he told her that the cash price at the non-profit clinic where he works is $90, no insurance involved at all.
So after she pays for the insurance policy, they then turn around and charge a co-pay that is five times the retail price of the drug. The clinic is non-profit, but they aren’t giving anything away, they’re covering operating expenses, etc at $90.
The sociopath here is the insurance company management willing to charge old or disabled people a lot of money for a supplemental Medicare policy, and then overcharge the co-pay to turn it into a profit center beyond the wildest dreams of any business man not selling hookers and blow!!!
I’m not naming names here to avoid trouble, but if you’re interested in the details, email me. She was livid when she found out about the fraud/theft going on with her insurance. Not quite as bad as that individual sociopath boosting a cheap drug to a $12K treatment, but bad enough when its a thing you will need over the long term.
They were basically stealing nearly $2000 a year from her for the past 18 months, and planning for it to last the rest of her life. Her grandparents all lasted into their 90s with the minimal health care available in the 50s and 60s, so she was facing that robbery for what, 20 more years? Grrrr. How many other patients are getting hit with this, also too!!