Drug goes from $13.50 to $750 overnight-help me understand

[brucethecollie]

Here is an article on it:

 

http://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html?_r=1

 

So, I'm hearing complaining having to do with people saying this guy is a jerk and i'm hearing people denounce capitalism.  I'm having trouble understanding, generally, what information I need in order to have an opinion.  

 

Help? Thanks in advance

[Agalloch]

I'm sure this specific case probably has more to do with the state, but I don't understand peoples sense of entitlement regarding certain drugs. Before these drugs were produced they cost of getting any was realistically billions of dollars, and they didn't complain about having to spend that to invent and produce them because it was too hard. But now that they can just nick it of someone by crying flase morality, suddenly the lower cost is somehow evil, every time.

[Sabras]

In this case a different company could simply sell their drugs for a lower cost. This has nothing to do with Capitalism!  In the free market situation companies would be able to compete with each other by reducing the prices of their drugs. Chances are that there are no alternative companies producing similar drugs as this pharmaceutical company most probably made sure to eliminate their competition through funding politicians who in return granted them political favours. If this indeed is the case, then it is the exact opposite of Capitalism!

[cab21]

would have to look at the books to see the numbers, all the ceo said was that it was selling at a loss, and the price change made it so the company would not lose money selling the drug.

 

on one video he compared it to selling a aston martin for the price of a bicycle when it was the previous price.

 

i would not exactly call this guy a free market capitalist, as a hedge fund manager, he urged government fda to not pass drugs from companies he was shorting.

[labmath2]

I think this case is a patent case. Aparently, he purchased the patent off another company for millions of dollars so he has to regain the investment. Its a common practice with old drugs that have no alternatives. Instead of people asking why no one else is coming to undercut him, they blame free market.

[shirgall]

http://marginalrevolution.com/marginalrevolution/2015/09/generic-drug-regulation.html

 

Theory: the cost of accelerated FDA approval of an out-of-patent generic is expensive enough to tolerate this price increase.

[Djoop]

When I see examples like this, I see a lack of free market capitalism. Which is a confusing topic to begin with, many people confuse this idea with laissez faire politics, and that it is not. 

The basic principle always applies though; rational economic actors acting in their self interest..

price goods and services most efficiently.

 

would not pass an opportunity like this. 

 

You could produce this drug for 600$ untill I offer it for 500$. If it can be made for < 13$, it's never going to be sold for 750$. 

That's capitalism, the reason why it doesn't work in this case is likely to be found in (failing) government regulation. 

[labmath2]

I was wrong, its not patent, its worse.

[shirgall]

It's not free market at all if it costs 7 cents a pill to manufacture, but $700M to get FDA approval even though the drug is approved for some other company in the US, and for a bunch of other companies in Europe. *That* is the market distortion you are looking for.