Kudos to Joe Nocera, who unlike his counterparts at the Wall Street Journal, properly attributes the hard-nosed investigative work that revealed the extent of the Valeant-Philidor connection to Hempton (Australia) and Boyd. Hempton's posts go back a while and make for chilling reading. Some of the accounting problems are surprisingly similar to those of Enron.
50
So when the price of certain drugs went up by 500%, 200%, that was okay, but when Valeant manipulated Philidor and Wall Street got nervous about that, it suddenly wasn't okay?
The real crime is what is legal, not what is illegal.
The real crime is what is legal, not what is illegal.
88
The Bernie Madoff of the pharmaceutical industry.
21
Is (add any name) Pharmaceuticals the Next Enron? Or, are they merely thieves with government protection?
24
Just sold VRX after reading this. Dishonest crooks.
20
We lock people up if we consider what they're doing (or might do) is a danger to others.
Is not price gouging, when it comes to a life-saving drug, a danger to society?
This kind of thing should be as criminal as robbery or even terrorism.
Is not price gouging, when it comes to a life-saving drug, a danger to society?
This kind of thing should be as criminal as robbery or even terrorism.
39
As unpopular as this fact might be, there is nothing illegal about increasing the price of a drug by whatever amount a company chooses. When done without using illegal mechanisms - like a kickback (see today's Novartis settlement) - there is nothing illegal about using a specialty pharmacy to facilitate the use of a company's products. There is nothing illegal about advertising drugs and there is no law that requires ANY spending on R&D. This is the system that prevails in America. If you want to change it, demand change frequently and loudly to your elected officials, vote for those who state a position that calls for cost controls and executive accountability on the part of drug companies. Then hold those officials accountable for the promises they make. The sad fact is that this is akin to the global warming controversy - whether or not you believe in the science, that doesn't change the fact that the Earth is getting warmer and we will all feel the consequences. Whether you think free market rules require a hands-off approach to drug price regulation, the current system is fiscally unsustainable and we will all feel the bite.
33
There is still some Pharma research going on but much, much less than in the 80ies and early 90ies, when the NIH expansion killed much of industrial research. 1 Bio $ is not much if you have to pay hundreds of millions for trials (to hospitals). The business model: look at a start-up, do due diligence, make a nice biotech contract (where you have to option to buy the firm with its patents but not if they don't fulfill expectations), then take over for late development and phase trials - makes absolute sense in the current climate - nothing sleazy about that. Also, in the face of insane prices for hospitalization and other medical services Pharma pricing is just a political problem (allow parallel imports). Want to bring industrial research back? Tell the funding bodies to primarily finance basic research. It would be good for Science, Pharma and the security of our drugs.
9
The scariest part of this story is the one not really reported. What happens if Valeant does implode like Enron. Then a lot of very critical drugs could suddenly be lost to the market, leaving patients high and dry.
Valeant's business practices regardless of legality are even without the hint of malfeasance, deplorable, since they prey on the weak and unfortunate who need medications and often have few choices. One has to question how some of these people sleep at night.
We need some protections and sad to say, some regulation in this area as monopolies can form, much the way power companies are regulated so that they generate a reasonable profit without gouging customers who have no alternatives in the case of who runs the wires or water lines to their houses.
One could almost wonder cynically if Valeants real mission is to drive us towards more government controlled healthcare.... (after packing away enough profits to not care about that result). However if that is the goal, one wonders how we will regulate the industry to continue expenditures on research that could eventually benefit millions. The power companies certainly demonstrate that innovation such as safe nuclear or clean generation technologies do not prosper in a regulated environment.
Valeant's business practices regardless of legality are even without the hint of malfeasance, deplorable, since they prey on the weak and unfortunate who need medications and often have few choices. One has to question how some of these people sleep at night.
We need some protections and sad to say, some regulation in this area as monopolies can form, much the way power companies are regulated so that they generate a reasonable profit without gouging customers who have no alternatives in the case of who runs the wires or water lines to their houses.
One could almost wonder cynically if Valeants real mission is to drive us towards more government controlled healthcare.... (after packing away enough profits to not care about that result). However if that is the goal, one wonders how we will regulate the industry to continue expenditures on research that could eventually benefit millions. The power companies certainly demonstrate that innovation such as safe nuclear or clean generation technologies do not prosper in a regulated environment.
7
This is the least dark side of the pharmaceutical industry's exploitation. The darkest side is the unnecessary deaths and diseases caused by drugs that the makers too often know the dangers of.
We all know Vioxx and ilk--but unlike the manufacture (was it Merck in this case?), we didn't know the danger of heart attack before we took Vioxx. Merck, however, did know the increased likelihood of thrombosis and thus heart attack.
A huge "blockbuster" drug is statins: every Big Pharma company seems to have their own statin. Only 1% of side effects (adverse effects) are reported. Drug companies make reporting adverse effects and onerous task for doctors, and doctors just don't report to the F.D.A.
Generic companies don't even have to keep their warning list current, thanks to a "Supreme" Court decision in 2013. Nor are generics responsible for faulty design. You better hit the internet before taking a new medication!
Why? http://statinvictims.weebly.com/
We all know Vioxx and ilk--but unlike the manufacture (was it Merck in this case?), we didn't know the danger of heart attack before we took Vioxx. Merck, however, did know the increased likelihood of thrombosis and thus heart attack.
A huge "blockbuster" drug is statins: every Big Pharma company seems to have their own statin. Only 1% of side effects (adverse effects) are reported. Drug companies make reporting adverse effects and onerous task for doctors, and doctors just don't report to the F.D.A.
Generic companies don't even have to keep their warning list current, thanks to a "Supreme" Court decision in 2013. Nor are generics responsible for faulty design. You better hit the internet before taking a new medication!
Why? http://statinvictims.weebly.com/
8
There was once a nice, honest guy who was president of Valeant. It wasn't that long ago (2003-2008). His name was Tim Tyson: West Point, US Army, GlaxoSmithKline, Bristol-Myers Squibb. He was a straight-up, experienced leader. He lasted five years. Biovail bought Valeant, cleaned house, got rid of Tyson, and brought in management guru J. Michael Pearson. Since then, revenues and profits have skyrocketed, morals have plummeted, and the public is suffering the consequences. And Pearson's laughing all the way to the bank! Today, Tim might want to take "Valeant Pharmaceuticals" off of his resume. After all, nobody would want Enron on their resume, either. Not even Pearson.
16
Oh brother, you obviously don't remember the sorted history of Biovail and the truck "accident" that occurred in 2003 to cover up an accounting scandal as well as all of the marketing "mishaps" that occurred while he was there.
It should be noted that Mike Pearson is not laughing all the way to the bank. He, unlike 99% of CEOs at public companies has almost all of his wealth tied to the value of the stock and can't sell any for 5 years. Thus, he would be crying right now not laughing. That alone should make you think that maybe this guy, unlike all of the Enron executives who exited with plenty of cash, actually has the long term in mind. Does that sound like someone running a fake business? Do they push the envelope yes? Do other pharma companies push the envelope yes?
They don't spend money on R&D. So what. Bigger companies spend money on R&D that for the most part fails and then they buy another company to fill that void. Valeant does lots of deals to fill that void and skips the bulk of the unproductive R&D. Everyone should consider that the company's R&D budget if that makes you feel better. Valeant raises prices dramatically on 2 of over 2000+ products that it owns. That's not the entire portfolio guys and represents 0.001% of the industry. You should be outraged at big pharma raising the price of a cardiovascular product each year by 10-15% because that represents billions not the $50-100M you are focusing on.
It should be noted that Mike Pearson is not laughing all the way to the bank. He, unlike 99% of CEOs at public companies has almost all of his wealth tied to the value of the stock and can't sell any for 5 years. Thus, he would be crying right now not laughing. That alone should make you think that maybe this guy, unlike all of the Enron executives who exited with plenty of cash, actually has the long term in mind. Does that sound like someone running a fake business? Do they push the envelope yes? Do other pharma companies push the envelope yes?
They don't spend money on R&D. So what. Bigger companies spend money on R&D that for the most part fails and then they buy another company to fill that void. Valeant does lots of deals to fill that void and skips the bulk of the unproductive R&D. Everyone should consider that the company's R&D budget if that makes you feel better. Valeant raises prices dramatically on 2 of over 2000+ products that it owns. That's not the entire portfolio guys and represents 0.001% of the industry. You should be outraged at big pharma raising the price of a cardiovascular product each year by 10-15% because that represents billions not the $50-100M you are focusing on.
3
Bernie (Sanders, not Madoff) recently described American capitalism exactly; the only country in the world where fraud is a business model.
39
Well the fraud part is certainly true, but surely not "the only country in the world." I mean, there are some countries where fraud is really the *only* business model.
8
Settled for $10M for actively and repeatedly misleading investors. What is wrong with that statement? Everything! What is the use of regulations and regulators if all that ever happens is the stockholder's have to pay a fine. They pay the fine, even when the fine is for an action against themselves. Think of it. An analogy is you rob yourself and get in trouble with the law. Unbelievable.
7
Adam Smith is noted by Conservatives as being for the free market ... but, he did say that given the human condition there must be an agency (e.g., government) to overseer capitalism.
Valeant is not so valiant and needs oversight.
Valeant is not so valiant and needs oversight.
13
Adam Smith's name was hijacked by conservatives because of his phrase about the market's invisible hand. The left should claim it back. From his writings, Smith is a good social democrat who could keep company with Bernie Sanders.
18
I know you are trying to get readers and Enron is a juicy subject, but let's get real. Valeant is not sleazy, it is a healthcare/pharmaceutical company. Just today Novartis agreed to settle ($390M) with the federal government over its relationships with a speciality pharmacy. They didn't own a piece of it and yet they still influenced the pharmacy. Is it an Enron also Joe? Why not? They are clearly sleazy for these practices also aren't they? I guess they aren't an Enron because its a small part of the business right? But wait isn't Valeant's specialty business just 7% of the revenues. Also why didn't Novartis report this relationship before the FTC investigation? Oh, yes because it was immaterial. The same reason Valeant didn't. Let's stop painting them as the big bad wolf and realize that ALL healthcare companies have some kind of practice that you would not be comfortable with if they fully disclosed them. I'm sorry if folks are naive about the practices of these companies but it isn't just one so they should all be considered the next Enron.
The system is broken from the top down. Patients commit fraud, docs commit fraud, hospitals commit fraud. There are no easy solutions and yes it is ironic that politicians try to hold these companies to a different standard when the government has done nothing to address these issues for decades.
The system is broken from the top down. Patients commit fraud, docs commit fraud, hospitals commit fraud. There are no easy solutions and yes it is ironic that politicians try to hold these companies to a different standard when the government has done nothing to address these issues for decades.
8
If we went back to the tax rates of the 1950's, executives might be less tempted to aim at huge, short-term payoffs achieved by fraudulent or ethically deficient maneuvers. If you're only going to take home a small fraction of a giant bonus, the risk-reward calculation changes, and you're more likely to adopt lower-risk, longer-term strategies that produce smaller but more lasting payoffs.
Better for the corporation, better for the nation, and better for the executive too, if it means the preservation of social structures that enable his/her secure accumulation of wealth.
Better for the corporation, better for the nation, and better for the executive too, if it means the preservation of social structures that enable his/her secure accumulation of wealth.
27
Nocera writes that it may all turn out to be innocent. That's unlikely but I'd be willing to bet that it will all turn out to be legal. Lawmakers have been turning themselves inside out for decades to accommodate an unworkable health care system designed to maximize profits for the entire heath care industry, including pharmaceutical houses.
22
The general working principle is that, if there is a unregulated way to make a fast buck in health care,somebody will take advantage of it. This includes pharma, robotic companies, and for-profit hospitals. All of them are siphons from the money available to spend wisely on health care, and, in a larger sense from spending on other national priorities. Obamacare is giving the overall health care industry a chance to see if it can make itself sustainable. I am skeptical.
12
Where are the gatekeepers? The reputable pharmaceutical houses should hold some clout if they united against this monster. Individual users of medicines are at the mercy of greedy wall street firms. Time for government inquiry,
7
The profit motive corrupts everyone it touches. Exploiting workers, cheating customers, despoiling the environment, cheating taxpayers, that is the kind of behavior the profit motive produces.
Democracy is the only force powerful enough to stand up to the profit motive. That is why the capitalists are so eager to purchase our Democracy.
Democracy is the only force powerful enough to stand up to the profit motive. That is why the capitalists are so eager to purchase our Democracy.
31
Out-of-control health service and products costs--not Obamacare, not Medicare, not insurance companies (at least some of them)--are driving our economy over the brink. These endlessly spiraling costs are the root cause for shrinking monetary support for other public services--public universities, K-12, etc--which must compete for the appropriation pie with obscene health care pricing. $20,000/night hospital rooms (not including surgery!), $200/dose legacy drugs that used to cost $3 per dose before "rebranding," drugs that make people more sick than well, and require other drugs to undo their damage, these all combine to eviscerate many other sectors of our economy. Reigning in these unabated health costs is the core of what must be done to allow a new, faster growing, stable economy to emerge. Ever notice health care is the only industry where over capacity--high hospital room vacancy rates, a plethora of new drugs--leads to higher prices, not more competitive, lower prices. It almost seems like a conspiracy.
22
As a former biotech executive, I'll say a few things I suspect most readers won't believe. I am more saddened and disgusted by companies like Valeant and Turing than all of you. I spent decades in basic R&D, first in a big pharma and then in a biotech I started with 4 partners. We were exclusively an R&D company with no products on the market. All we did was develop novel drugs with new mechanisms of actions (i.e., no "me-too's," patent extensions, reformulations, etc.). Once we had promising drug-like molecules and convincing data, we created partnerships with larger pharmas for late-stage development. In all my years, I never once met even one scientist in R&D in pharmas large or small who was interested in anything other than finding new, effective drugs for serious and often fatal diseases. Pay for R&D scientists is not linked to the price of drugs they develop and the scientists have nothing to do with setting prices. More important, we have friends and family who suffer from these diseases too.
Companies like Valeant and Turing give true biotech a bad name and are not representative of the industry or the scientists who work in it. They are NOT biotechs or even pharmaceutical companies - they are parasitic organizations managed by greedy financial types (not scientists) who take advantage of a woefully inadequate regulatory environment and who make all pharma look bad.
Companies like Valeant and Turing give true biotech a bad name and are not representative of the industry or the scientists who work in it. They are NOT biotechs or even pharmaceutical companies - they are parasitic organizations managed by greedy financial types (not scientists) who take advantage of a woefully inadequate regulatory environment and who make all pharma look bad.
111
It seems Stephen King is not alone in knowing how to make money out of Misery. Big Pharma ended profit-making by nickel and dime decades ago and Little Pharma is catching up fast. Like the former hedge fund manager, Martin Shkreli, who increased the price of Daraprim to $750 per tablet from $13.50 overnight after buying the licence. If that doesn't define extortion or making money out of the misery of others, nothing does. The abuse of health care has become systemic and Valeant is simply one player in a global field of rogues. Today's pharmaceutical mantra seems to be 'You get sick - I get rich'
Hippocrates - where are you?
Hippocrates - where are you?
25
Cue the zither music. Enter the modern-day Harry Lime, emerging from the sewers of Wall Street.
6
In one sense Valeant (our brave warrior company) has done a public service via its blatant actions. Pharmaceutical companies, including the generic industry, are dumbfoundingly unscrupulous. There are so many examples, how to choose?
One big "technique" is to market drugs illegally, make a vast profit, and then pay a sometimes huge fine: net with fine is still huge. We see pharma company after pharma company committing the same crime, getting sued, and setting a business example for the next company. And people get sick and die from this!
For example, a week or two ago we read an article about J&J getting fined, criminal, and civil, $2.2 billion for improperly promoting an antipsychotic drug for dementia.
http://www.nytimes.com/2013/11/05/business/johnson-johnson-to-settle-ris...
As the article says, this is "the largest in a string of recent cases involving the marketing of antipsychotic and anti-seizure drugs to older dementia patients."
You don't have to search long to find the other pharma companies fined for doing exactly the same thing. For example:
This article gives a history: Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson http://www.nytimes.com/2010/10/03/business/03psych.html?pagewanted=all
We need to stop this business model. Yes, great, it's profitable: but it sickens and kills people. And it's the core of our healthcare system.
One big "technique" is to market drugs illegally, make a vast profit, and then pay a sometimes huge fine: net with fine is still huge. We see pharma company after pharma company committing the same crime, getting sued, and setting a business example for the next company. And people get sick and die from this!
For example, a week or two ago we read an article about J&J getting fined, criminal, and civil, $2.2 billion for improperly promoting an antipsychotic drug for dementia.
http://www.nytimes.com/2013/11/05/business/johnson-johnson-to-settle-ris...
As the article says, this is "the largest in a string of recent cases involving the marketing of antipsychotic and anti-seizure drugs to older dementia patients."
You don't have to search long to find the other pharma companies fined for doing exactly the same thing. For example:
This article gives a history: Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson http://www.nytimes.com/2010/10/03/business/03psych.html?pagewanted=all
We need to stop this business model. Yes, great, it's profitable: but it sickens and kills people. And it's the core of our healthcare system.
22
There are a few myths that are perpetuated by the pharmaceutical companies and widely believed by the public,
1) The high drug prices are warranted to offset the cost of research and development. In reality, investment in research by companies is only 10-15% of their intake, nowhere close to the price inflation on drugs.
2) The second myth is that pharmaceutical companies make drug discoveries. In fact most conceptual advances come from academic science and not from the companies themselves which are mainly involved in screening and testing. This implies that these companies are double dipping into the public trough, once to avail themselves freely of public funded research and then to make an outlandish profit on the drugs they market.
1) The high drug prices are warranted to offset the cost of research and development. In reality, investment in research by companies is only 10-15% of their intake, nowhere close to the price inflation on drugs.
2) The second myth is that pharmaceutical companies make drug discoveries. In fact most conceptual advances come from academic science and not from the companies themselves which are mainly involved in screening and testing. This implies that these companies are double dipping into the public trough, once to avail themselves freely of public funded research and then to make an outlandish profit on the drugs they market.
17
Could anyone answer why the target companies bought by Valeant hadn't already raised the prices of their drugs? (I seriously don't get this.)
3
Maybe they foolishly believed they had an ethical responsibility to society. Silly corporations, not gouging customers!
7
Didn't the Sarbanes-Oxley law prevent future Enrons?
"... Valeant employees work at Philidor using fake names". How do they file their Federal and State Income Taxes? Seems like a quick IRS audit on a couple years of filed 1040's would shake this out
10
Haven't you heard, OSS Architect, Congress has cut the IRS budget for audits to the bone. They have no money to "shake this out"! Undoubtedly, Congress wanted to save taxpayers money by doing this, but in the process it has cost the government millions (if not more) for the treasury. Thank for small favors, Congress.
1
Sounds more like Tyco than Enron. Jeff Skillings, CEO of Enron got convicted of securities fraud and ended up in Federal Prison, also known as Club Fed. While Tyco CEO, Dennis Kozlowski got convicted of common fraud and ended up in State Prison sharing a cell with drug dealers and pimps. This sounds more like common fraud than securities fraud.
9
See how well Capitalism and Free Markets work?
When I hear people talk about Capitalism and deregulation, I ask them if they ever read Adam Smith's "Wealth of Nations", the book that launched the principle of Capitalism back in the 1700's? Ninety-nine percent of them say "No".
Smith said that greed had to be harnessed. He acknowledged that the natural tendency of humans is to pursue their own self-interests to the detriment of everyone else. Which is why he stated that greed must be or "bridled". Anyone ever ridden a horse? The bridle is what you use to control the horse. Otherwise it runs wild and places the rider in danger of harm. That is precisely why Adam Smith used that analogy. Horses were the primary mode of transportation that era. Everyone understood the power of a horse, and that it could only benefit someone (harnessed) if you put a bridle in it's mouth.
Moreover, to further the analogy, Smith pointed out that if you place two merchants (businessmen) in a room by themselves they will conspire to fix prices and drive down the cost of labor - which is completely antithetical to the principles of Capitalism. The idea of regulation was designed to prevent these things from occurring. It is high time that the business interests and their political minions in this country who have kidnapped and corrupted the original principles of Capitalism be divested of their unbridled behavior. They know not that of which they speak.
Nor do they have souls . . .
When I hear people talk about Capitalism and deregulation, I ask them if they ever read Adam Smith's "Wealth of Nations", the book that launched the principle of Capitalism back in the 1700's? Ninety-nine percent of them say "No".
Smith said that greed had to be harnessed. He acknowledged that the natural tendency of humans is to pursue their own self-interests to the detriment of everyone else. Which is why he stated that greed must be or "bridled". Anyone ever ridden a horse? The bridle is what you use to control the horse. Otherwise it runs wild and places the rider in danger of harm. That is precisely why Adam Smith used that analogy. Horses were the primary mode of transportation that era. Everyone understood the power of a horse, and that it could only benefit someone (harnessed) if you put a bridle in it's mouth.
Moreover, to further the analogy, Smith pointed out that if you place two merchants (businessmen) in a room by themselves they will conspire to fix prices and drive down the cost of labor - which is completely antithetical to the principles of Capitalism. The idea of regulation was designed to prevent these things from occurring. It is high time that the business interests and their political minions in this country who have kidnapped and corrupted the original principles of Capitalism be divested of their unbridled behavior. They know not that of which they speak.
Nor do they have souls . . .
37
As a person who depends on a life saving drug, I feel Pearson should be in jail.
How is it not illegal for something like this to happen? He made himself a billionaire by trading in others' misery? Unfathomable. The fact that anyone would celebrate this guy as a hero in the world of "business" is indicative of a tremendous sickness in our culture.
It's time for the government to step in and do something about this uniquely modern problem while there is still time to set a precedent: we need iron clad legislation that will keep hedge funds OUT of the pharmaceutical industry. Hedge funds exist to do one thing and one thing only: make money by any means necessary. Say what you will about the role of capitalism in growth and development, the mission of hedge funds is fundamentally not compatible with the pursuit of medical therapies. There is no amount of "efficiency" hedge funds could bring to this marketplace that would offer a net improvement to the current model. Allowing hedge fund to game the system is disastrous for the sick and their families, disastrous for society, and disastrous for anyone not invested in one of the pariah companies who engage in this most cynical and malignant business strategy. I hope that both parties will see this for what it is, and that the problem will become into a significant issue in the upcoming presidential election.
How is it not illegal for something like this to happen? He made himself a billionaire by trading in others' misery? Unfathomable. The fact that anyone would celebrate this guy as a hero in the world of "business" is indicative of a tremendous sickness in our culture.
It's time for the government to step in and do something about this uniquely modern problem while there is still time to set a precedent: we need iron clad legislation that will keep hedge funds OUT of the pharmaceutical industry. Hedge funds exist to do one thing and one thing only: make money by any means necessary. Say what you will about the role of capitalism in growth and development, the mission of hedge funds is fundamentally not compatible with the pursuit of medical therapies. There is no amount of "efficiency" hedge funds could bring to this marketplace that would offer a net improvement to the current model. Allowing hedge fund to game the system is disastrous for the sick and their families, disastrous for society, and disastrous for anyone not invested in one of the pariah companies who engage in this most cynical and malignant business strategy. I hope that both parties will see this for what it is, and that the problem will become into a significant issue in the upcoming presidential election.
28
There is a disturbing similarity between the government's handling of Valeant's alleged misbehavior and that of car companies, like VW and GM, who cover up vehicle defects that endanger health and safety. At worst, these companies can expect little more in the way of punishment than a financial slap on the wrist. Congress, heavily lobbied by big corporations, makes sure that fines for such malpractice are so low that they have little deterrent effect, and that criminalizing corporate wrongdoing is almost unheard-of. Killing another person with a gun is a crime; killing another person with a known auto safety defect or denial of a life-saving drug that's too expensive to buy is not. In a well-regulated free market environment, that would not be the case.
15
I think it's time for the Times to do a little more digging on the subject of specialty pharmacy. Almost all new drugs are now being fulfilled through specialty pharmacy, thus leading to inflated prices for what are essentially non-essential services supposedly being offered to patients (remember, the pharmaceutical companies pay specialty pharmacy to do the fulfillment, track usage, encourage adherence, etc). But specialty pharmacy is now being used as a means by which the pharmaceutical companies can jack up the prices of drugs not actually requiring specialized services (look at how many new drugs are specialty vs how many are available at your local retail pharmacy). Even Walmart, whose pharmacy business is in the tank (a sore subject for the company) has gotten into the specialty pharmacy business. And Aetna requires Medicare Advantage members to fill all their scripts (small molecule and specialty) at Walmart. It's a comfy relationship where we all lose. Just saying...
22
Anyone who wants to know why the cost of care rises, here it is. Hedge funds run our medical pricing. I administer a drug in my practice that has been off patent for decades, is used in most general anesthetics and, until recently, cost about 5.00 per vial. Now 110.00 per vial because FDA hasn't approved competitors, while allowing this company to band name it. There are dozens of useful drugs that cost nearly nothing to produce, and are as good or better than newer drugs, but ...they need to be restricted to make room for the newer drug that is 'on patent'.
36
It's one thing to point out the problems, but what is the solution? How can we possibly bring about sensible regulation and control for an industry (any industry) that has already bought and paid for those elected who could bring about such a change?
Even if we rid ourselves of the abomination that is money and corruption within our electoral system, we are left with a flawed media who will continue to support and disproportionately promote candidates of their choosing.
We can deal with our media later (they are on notice, and we are watching), but for now we need to work on serious electoral reform.
Good for Joe Nocera, we need more articles bringing to light the greed-based activities and behavior of corporations and their executives.
We need to transform such knowledge into corrective action.
Even if we rid ourselves of the abomination that is money and corruption within our electoral system, we are left with a flawed media who will continue to support and disproportionately promote candidates of their choosing.
We can deal with our media later (they are on notice, and we are watching), but for now we need to work on serious electoral reform.
Good for Joe Nocera, we need more articles bringing to light the greed-based activities and behavior of corporations and their executives.
We need to transform such knowledge into corrective action.
14
Philidor - love gold
14
In glancing through the Valeant 2014 Annual Report, I noted that their current income is based largely on three prescription drugs: Syprine (trientine HCl}, a copper chelating agent for Wilson's disease, Xenazine (tetrabenazine), a nonspecific (mechanism unknown) inhibitor of chorea associated with Huntington's disease, and Wellbutrin XL (a long acting form of generically available Wellbutrin}, which Valeant admits is losing ground fast. Their other businesses and pipeline have very little value.
So let's focus on Syprine and Xenazine. As for Syprine, the generic form (trientine) is available in Europe via a distributor called Univar, based in the UK. Interestingly, while Sun Pharma (based in India) manufactures a wide range of speciality generic pharmaceuticals, tetrabenazine is conspicously absent. It seems that someone could easily manufacture generic tetrabenazine and make it widely available to patients in need.
So where exactly is the value in Valeant?
So let's focus on Syprine and Xenazine. As for Syprine, the generic form (trientine) is available in Europe via a distributor called Univar, based in the UK. Interestingly, while Sun Pharma (based in India) manufactures a wide range of speciality generic pharmaceuticals, tetrabenazine is conspicously absent. It seems that someone could easily manufacture generic tetrabenazine and make it widely available to patients in need.
So where exactly is the value in Valeant?
11
Unfettered Capitalism.
The best corruption money can buy. American politics.
What used to be Patriotic has now become screw you neighbor.
What used to be for the common good has now become more, mine!
Time for the pendulum to swing back to the America of FDR.
We the People need to arise and remake government for the many not the few.
Bernie Sanders is the only candidate that is not owned. Never has been.
Has walked the talk unwaveringly. The only candidate! He has worked his entire career for the people. Not the Corporation.
Go Bernie!
Get. Out. and Vote!
The best corruption money can buy. American politics.
What used to be Patriotic has now become screw you neighbor.
What used to be for the common good has now become more, mine!
Time for the pendulum to swing back to the America of FDR.
We the People need to arise and remake government for the many not the few.
Bernie Sanders is the only candidate that is not owned. Never has been.
Has walked the talk unwaveringly. The only candidate! He has worked his entire career for the people. Not the Corporation.
Go Bernie!
Get. Out. and Vote!
24
Time to get the profit-makers and dealers out of medicine. Single payer for all, regulated by nurses and doctors and pharmacists, not politicians or businessmen.
24
I think government run healthcare, like the VA, would be a better solution than single payer. Medicare is single payer and hospitals, doctors and drug companies still get rich off of it. Anytime Medicare does something to reduce costs - like cut reimbursement rates - providers do something to offset that - like increase the number of reimbursable procedures.
Nationalize the health care industry!
Nationalize the health care industry!
6
And Enron was also run by an ex-McKinsey consultant
14
We need laws that control the greed of the pharmaceutical companies. Europe has them. The cost of drugs are a fraction of the cost here in the US and all the drugs we can get are available there.
15
Europe and the rest of the world only have the same drugs as the US today because R&D is subsidized by US pricing. If the US adopted the same pricing model as Europe, many promising drugs will be killed in development because the market will not return the direct cost of development.
In the next 5-10 years, this is going to change and we will see new drugs developed only for the US market. European reimbursement authorities, who negotiate prices, are requiring direct comparative data of new drugs versus the current standards. These trials are much more expensive. When FDA / EMA do not require such trials for approval, it will be very difficult for Pharma companies to justify this trial cost based on the European return. The one question we should all ask is whether we need these drugs in the US either, if they are not proven to be effective over current, cheaper generics?
In the next 5-10 years, this is going to change and we will see new drugs developed only for the US market. European reimbursement authorities, who negotiate prices, are requiring direct comparative data of new drugs versus the current standards. These trials are much more expensive. When FDA / EMA do not require such trials for approval, it will be very difficult for Pharma companies to justify this trial cost based on the European return. The one question we should all ask is whether we need these drugs in the US either, if they are not proven to be effective over current, cheaper generics?
When talking about drugs it is important to distinguish between those companies that invent and develop drugs for which they have a patent and have exclusive rights; and those companies that deal in generic drugs. The two businesses are so completely different that it is unfortunate that both are frequently lumped together and called pharmaceutical companies. Generic drugs (drugs off patent) are part of the public domain, anybody so inclined can manufacture and sell them as long as they meet FDA standards.
2
It's fair to compare Enron to Valeant because both took advantage of a captive market created by perverse government regulation. Enron exploited California's energy deregulation laws (which it secretly helped write). Drug company lobbyists are all over Congress who write the laws controlling Medicare and Medicaid reimbursement
17
This guy is a criminal. He may not be doing anything technically "illegal"- but his behavior is definitely displaying a criminal mindset and mafia style "business". This kind of business model in the pharma end is what gives them a bad rap. If they are not investing the real research and development they exist only to suck the patients dry.
13
Mr. Nocera:
I hope you will continue to shine a light into the dark recesses of Mr. Pearson's
"business model". This article is clear statement of the need for single payer universal healthcare. The prison system is filled with the wrong people, why can't we find room for prople like Mr. Pearson?
I hope you will continue to shine a light into the dark recesses of Mr. Pearson's
"business model". This article is clear statement of the need for single payer universal healthcare. The prison system is filled with the wrong people, why can't we find room for prople like Mr. Pearson?
15
What doesn't make sense here is why the original owners of those drugs didn't hike the prices before Valeant bought them. How does Valeant get away with extreme price hikes? Is the fair market not working here?
5
Perhaps the original owners had a modicum of decency?
2
The myth of the free market explodes daily. Congress that fails to enforce existing laws - giving breaks to crooks, etc. show a system ripe to implode. So far the little guy - be he investor or consumer pays for this trash capitalism, while the corrupt get away.
17
But greed is good! We know this, because the libertarians keep telling us so.
18
A recent Rheumatoid drug, called a JAK-1 blocker was approved for e RA treatment. It was originally discovered by NIH (taxpayer funded) and in 1996 they partnered with Pfizer to do clinical trials. A rule of NIH developed drugs is that the private partner is not to sell the drug at excessive costs to the public. The NIH did the risky work, Pfizer just tested it. The taxpayer was the original investor. However, in some strange Washington-lobbyists way the NIH dropped the public protection part and the drug is now at $3000 per month for 60 pills. We know Drug companies pay more for advertising then research, and we know the NIH does a lot of their risky early discoveries.
We need to follow the trail and see how this came about. I bet their is a nice rotten process here.
We need to follow the trail and see how this came about. I bet their is a nice rotten process here.
152
It is not true that Pfizer "just tested it" and that the NIH did the "risky work"....clinical trials are extremely costly and where most drugs fail. Human clinical trials are the most risky and most costly and most time consuming part of drug development
2
NIH has now created the SBIR TT program that gives preferential granting of funds to anyone that wishes to move NIH "technology" to the marketplace. An NIH scientist whose technology is moved to the marketplace is promoted. The company that licenses the technology benefits with millions of SBIR TT Phase 1 and 2 dollars. Fast tracking is also in play.
Not much is coming out of NIH these days. This doesn't matter since this SBIR TT is restricted to NIH scientists.
Not much is coming out of NIH these days. This doesn't matter since this SBIR TT is restricted to NIH scientists.
1
Mr. Nocera,
Will you please write a follow up article regarding:
- why it's okay for real estate companies to go on acquisition sprees, rather than developing every property on their own.
- why it's okay for cable and telecom companies to roll up cash flow streams, rather than laying all the line themselves.
- why it's okay for oil pipeline companies to acquire existing, cash generative assets, rather than building all new pipes themselves?
- why it's okay for media companies to acquire existing content libraries or other content producers, rather than just creating everything in house.
- why venture capital should stop investing in drug R&D, so the existing pharmaceutical companies should fund it all themselves (instead of just acquiring the successful drugs from VCs).
Thank you.
Will you please write a follow up article regarding:
- why it's okay for real estate companies to go on acquisition sprees, rather than developing every property on their own.
- why it's okay for cable and telecom companies to roll up cash flow streams, rather than laying all the line themselves.
- why it's okay for oil pipeline companies to acquire existing, cash generative assets, rather than building all new pipes themselves?
- why it's okay for media companies to acquire existing content libraries or other content producers, rather than just creating everything in house.
- why venture capital should stop investing in drug R&D, so the existing pharmaceutical companies should fund it all themselves (instead of just acquiring the successful drugs from VCs).
Thank you.
2
About Pharms. They often do not do the original investments, they wait for others such as the taxpayer NIH do do the risky early work and when they see it has a chance they move in. They also buy up research groups who have done the hard work. They do the clinical trials and when approved charge as much as congress will allow (which is as much as they can get).
3
i agree that roll-ups are ok but the gouging seems to have backfired, no?
Intellectually "Honest" Lets see. Medications save lives and cure diseases. If a house is to expensive don't buy it. If the movie is too expensive, don;t watch it. But if you can't afford your meds because of the greed of the Pharma industry you could die or suffer serious debilitating illness. I'm amazed that you can't see that since you claim to be intellectually honest.
4
My neighbor stole almost $200,000 from his clients at a financial firm. He went to prison. Why? Because he didn't steal enough. Big corporate criminals don't go to jail. That's the problem.
16
"Kill one man, and you are a murderer. Kill millions of men, and you are a conqueror. Kill them all, and you are a god." -Jean Rostand, "Thoughts of a Biologist (1939)".
2
Great column!
Challenge: investigate the widely reported story of AstraZeneca's scamming a patent out of Congress for Nexium which is a double dose of Prilosec, on which AstraZeneca also held the patent. The WSJ covered this but there was no consequence to AstraZeneca. Similarly Scherring patented Clarinex when Claritin went off patent.
Prescription drugs cost Americans $259,092,876,285 in 2014 according to KFF. We spend twice as much on prescription drugs as does England, France or Germany and 40% more than Canadians (under Harper). The pharmaceutical industry is highly profitable in Europe and Canada so the arguments about R&D etc are moot. We pay 4 times more than do the Danes.
How do you stand on the drug scams? How about lowering the costs of doing business in America to that of Canada, or France? Where is the business community on this? Exclude the hospitals, the pharmaceuticals, the retail pharmacies, and health insurance, of course.
Challenge: investigate the widely reported story of AstraZeneca's scamming a patent out of Congress for Nexium which is a double dose of Prilosec, on which AstraZeneca also held the patent. The WSJ covered this but there was no consequence to AstraZeneca. Similarly Scherring patented Clarinex when Claritin went off patent.
Prescription drugs cost Americans $259,092,876,285 in 2014 according to KFF. We spend twice as much on prescription drugs as does England, France or Germany and 40% more than Canadians (under Harper). The pharmaceutical industry is highly profitable in Europe and Canada so the arguments about R&D etc are moot. We pay 4 times more than do the Danes.
How do you stand on the drug scams? How about lowering the costs of doing business in America to that of Canada, or France? Where is the business community on this? Exclude the hospitals, the pharmaceuticals, the retail pharmacies, and health insurance, of course.
13
PS AstraZeneca is a British-Swedish multinational pharmaceutical.
Swedes pay $.25 for every dollar that Americans pay for Pharmaceuticals. I bet AstraZeneca's stock holders are happy. I bet Swedish and British stockholders think that Americans are stupid and American companies are stupider.
5
"Similarly Scherring patented Clarinex when Claritin went off patent."....You can't patent a drug that is off patent. When a drug goes off patent the drug itself becomes part of the public domain and anybody is free to make and sell it. Further you can't patent a drug that is already under patent. When a patent is approved the information is placed in the public domain. In order to be granted a new patent an inventor has to demonstrate novelty, which is impossible to do if the information that has already been made public.
2
It is CRIMINAL that profit-at-any-cost Greedsters, also known as thieves, can buy up their competition and destroy the companies they take over. Criminal. WE need to demand that serious Antitrust laws be reinstated NOW. WE are being held hostage to this greed with increased insurance and medical costs to ourselves and OUR governments. Meantime, we can only hope some socially conscious competitors - if there are still any competitors - step up like San Diego-based Imprimis Pharmaceuticals did when brazen, socially unconscious greedster Martin Shkrelibrazen bought Turing Pharmaceuticals recently and increased the price of a 62 year old drug 4000%. Imprimis is going to offer an alternative for $1 and still make plenty of money and I hope Martin gets run out of town on a rail.
http://www.washingtonpost.com/news/wonkblog/wp/2015/09/21/how-an-obscure...
http://www.nbcnews.com/health/health-news/competitor-offer-1-pill-after-...
http://www.washingtonpost.com/news/wonkblog/wp/2015/09/21/how-an-obscure...
http://www.nbcnews.com/health/health-news/competitor-offer-1-pill-after-...
11
Again another case where poorly enforced regulations have shown all too well that the sick and ill are absolutely not the concern of the companies that produce the drugs that so many depend upon to just live. "Rethuglicans", GOP shills and other various ne'er-do-wells have pulled the wool over the vast majority of sheep that vote for them again. Let's not, for a minute, think that the end users of the drugs are the actual ones that matter to the companies. They, you and I, are just grist for the mill that the shareholders benefit from. The shareholders are the actual ones that matter to these egregious, essentially unfettered vultures of the "health care" system. I just don't know what to do about it.
9
I think even the shareholders do not count to them. Only the execs who make these decisions matter. As long as they collect out of sight salaries, bonuses, and perks they are happy and will fleece the company, those who need the drugs, and anyone else who deals with them.
6
Valeant's mission statement is telling www.valeant.com/about. It never mentions a single word about improving health, reducing suffering, or curing disease. According to Valeant's mission statement diseased people are resources to exploited, not human beings to be served.
23
Valeant, a drug company that seems to have no scruples in gouging the public, is an excellent example of unfettered capitalism; and when married to a crook...and whose god is called "greed". we have a perfect storm of sleaziness, as you suggested. Remember this other guy who, soon as he acquired a drug company, spiked a pill from $13 to $750?!! ; justice demands jail and a public act of contrition and apology (but it would be like expecting roses from a poisonous snake, inconceivable). There is a TV series called "Greed", and, among many, a book called "The Ugly American", revealing an absolute lack of decency, where doing the right thing is for 'sissies'. How low can we get?
8
Medicines are so vital to our well-being, I call for a consortium of countries to inaugurate medical research facilities. They've done it with the CERN Large Hadron Collider; they can do it for biological research. Patents would be shared by the countries. No billionaires would be created to siphon off outrageous rewards for shuffling corporate paper.
4
Let this tale be a warning to those who use privatization, deregulation, and free market economics as a panacea for all of society's needs.
20
Yeah, it's pretty bad when people become billionaires by taking from the pockets of poor people with heart problems, but isn't it just another sad facet of the lack of corporate governance and ethics that is so pervasive? Whether it is the CEO of Countrywide getting paid a hundred million for sitting atop a company making lots of undocumented subprime loans that will eventually go bust or some joker at AIG getting paid a half a billion for subjecting the company to systematic credit risks, or maybe some Fund-of-funds guy making tens of millions for the "due diligence" he did in placing Money with Bernie Madoff...or maybe even just the run-of-the-mill overpaid CEO taking home ten million a year, there is often such a giant disconnect between the value of a person's work and the sums that they manage to have directed to themselves that there almost needs to be a public policy against it. What does one even do with that much money? If I had that, it would leave me feeling queasy wondering where it all really came from.
7
A couple things: J. Michael Pearson wasn't JUST a management consultant, he was a management consultant at McKinsey and company. A disproportionate number of "legal, but stinks" business practices have been popularized by McKinsey consultants. This is an infection best treated first with fresh air and sunlight. Name Mckinsey when it is appropriate, and eventually the healing blade will be wielded.
There is an appearance that Citron Research has been following Valeant for a while (see above--ex-McKinsey CEO = worth a look) and waited for something that was completely indefensible before striking. (I'm not a good enough business writer to explain the key lawsuit briefly, but Citron explains at some length)
There is an appearance that Citron Research has been following Valeant for a while (see above--ex-McKinsey CEO = worth a look) and waited for something that was completely indefensible before striking. (I'm not a good enough business writer to explain the key lawsuit briefly, but Citron explains at some length)
10
Blame it on the MBA programs which teach these people that they have no responsibility to anything or anybody but the shareholders. And they all want to have their retirement nest egg by the time they are 40. I worked in the drug industry before and after the MBAs took over in the 1990s and that is the one, singular change that is responsible for these practices. Historically, the research scientists and development people were key players but now it is B school types who are in control.
1
The book about McKinsey's role in such practices remains to be written. A beginning was made in 2008 with this one:
"From Good Hands to Boxing Gloves: The Dark Side of Insurance"
by David J. Berardinelli
McKinsey taught the insurance industry the technique of turning policy holders who had not filed a claim against those who had, another version of "those people".
"From Good Hands to Boxing Gloves: The Dark Side of Insurance"
by David J. Berardinelli
McKinsey taught the insurance industry the technique of turning policy holders who had not filed a claim against those who had, another version of "those people".
1
Financial capitalism is very much at fault here.
Developing a successful drug is a long process, with many pitfalls along the way. Making a good Scotch whiskey takes years. It took 3M a long time to come up with Post-It Notes.
But we investors demand earnings reports every 91 days. And we demand "guidance". Missing "expectations" by a penny can crater a stock.
It's a mismatch between short and long. Valeant exploited our undervaluation of the longterm process of developing drugs and gave us the short term performance that we investors demand. As Nocera says, Valeant may not have broken any laws by doing that. Our emphasis on the short and ephemeral and our dismissal of the long is why we are falling so far behind everywhere.
Developing a successful drug is a long process, with many pitfalls along the way. Making a good Scotch whiskey takes years. It took 3M a long time to come up with Post-It Notes.
But we investors demand earnings reports every 91 days. And we demand "guidance". Missing "expectations" by a penny can crater a stock.
It's a mismatch between short and long. Valeant exploited our undervaluation of the longterm process of developing drugs and gave us the short term performance that we investors demand. As Nocera says, Valeant may not have broken any laws by doing that. Our emphasis on the short and ephemeral and our dismissal of the long is why we are falling so far behind everywhere.
12
"Post it" was a complete accident unrelated to directed product development. Post-It was a failed glue. A bright person saw a value in the "failure" as it was and ... "Post-It" was the happy and fortuitous result.
In general, pharma companies spend more on advertising that they spend on research That *includes* the billions required to test products, most of which do not make it to pharmacies. They spend more on marketing than on research.
Even in the 50s, investors "demanded" returns. And made money. They managed both without gouging consumers. And without paying CEOs salaries that range from 300 - 1000 times the average company salary.
It's still possible.
"we investors demand".
Cool. Take your "demands" and ....
In general, pharma companies spend more on advertising that they spend on research That *includes* the billions required to test products, most of which do not make it to pharmacies. They spend more on marketing than on research.
Even in the 50s, investors "demanded" returns. And made money. They managed both without gouging consumers. And without paying CEOs salaries that range from 300 - 1000 times the average company salary.
It's still possible.
"we investors demand".
Cool. Take your "demands" and ....
There is a simple remedy.
When a pharmaceutical company that has developed drugs is purchased and the rights to those non-generic drugs is transferred, the drugs automatically lose their patent protection and enter the generic market, perhaps even with a Federal subsidy for generic drug firms to begin manufacture of the drugs in question.
Make such deals as Valeant has engaged in worthless and they will go away.
When a pharmaceutical company that has developed drugs is purchased and the rights to those non-generic drugs is transferred, the drugs automatically lose their patent protection and enter the generic market, perhaps even with a Federal subsidy for generic drug firms to begin manufacture of the drugs in question.
Make such deals as Valeant has engaged in worthless and they will go away.
12
That's not true. Patents for drugs are assigned all the time and the patents remain valid. I worked in the Intellectual Property dept. for a pharmaceutical company. Can you cite your source?
"In the seven years Pearson has run the company, Valeant has done more than 100 deals."
I see this in the broader market as well, particularly the healthcare sector. It requires a legion of lawyers, but not without shareholders and boards approval. This lead to the broader question: can a company create financial value for shareholders (the 1%) without actually create anything of value to society (healthier, cheaper but more effective drugs, standards of living, etc)? If a company's book value increases as a result of transfers of wealth and power (mergers and consolidations, market price fixing), rather than producing anything (now mostly off shored), or involving in creative capitalism ("doing good" according to Bill Gates), then who are the shareholders and boards that approve these proceedings? The money required for such methods is no pocket change. Billions are paid to the lawyers, in lobbying, in suing competitors and forcing them out of the market, in compensations of a few key personnel, in marketing to change public perceptions about what is "doing good." The Age of Information and Infomercialism have allowed healthcare to be a commodity to be consumed, since knowledge often leads to the assumption that the individualistic choices know best. Yet, the Baby Boomers are about to retire with $12 trillion in transfer of wealth. I don't believe they will want to spend all that on healthcare, in the sense of "winner takes all" that are Valeant and the industry currently.
I see this in the broader market as well, particularly the healthcare sector. It requires a legion of lawyers, but not without shareholders and boards approval. This lead to the broader question: can a company create financial value for shareholders (the 1%) without actually create anything of value to society (healthier, cheaper but more effective drugs, standards of living, etc)? If a company's book value increases as a result of transfers of wealth and power (mergers and consolidations, market price fixing), rather than producing anything (now mostly off shored), or involving in creative capitalism ("doing good" according to Bill Gates), then who are the shareholders and boards that approve these proceedings? The money required for such methods is no pocket change. Billions are paid to the lawyers, in lobbying, in suing competitors and forcing them out of the market, in compensations of a few key personnel, in marketing to change public perceptions about what is "doing good." The Age of Information and Infomercialism have allowed healthcare to be a commodity to be consumed, since knowledge often leads to the assumption that the individualistic choices know best. Yet, the Baby Boomers are about to retire with $12 trillion in transfer of wealth. I don't believe they will want to spend all that on healthcare, in the sense of "winner takes all" that are Valeant and the industry currently.
6
I have no sympathy for Valeant but this is not a well written column. Factually, it is not wrong about the said company; but repeating clickbait by equating it with Enron is beneath NYT
2
What is weird about this story is that we live in a system that applauds and rewards the disgusting tactics that Valeant used to drive up its market value -- price hikes and research cuts -- but has problems with some sort of shady financial deal that might attract the attention of regulators.
It is clear that the invisible hand of the market does not work with health care. Even if we did not have insurance companies between us and the drug companies, we would not be making the same sort of cost/benefit rational economic choices in buying these products.
Valeant's initial strategy that was rewarded by the markets is what should have attracted regulators' ire -- if only we had the right regulations in place.
It is clear that the invisible hand of the market does not work with health care. Even if we did not have insurance companies between us and the drug companies, we would not be making the same sort of cost/benefit rational economic choices in buying these products.
Valeant's initial strategy that was rewarded by the markets is what should have attracted regulators' ire -- if only we had the right regulations in place.
12
Two things:
1.- Drugs, and perhaps other essential life sustaining devices should not be patentable. The research for development can easily come from a tax on all drugs and be done in universities. Distributing research money to worthwhile research projects requires some thought, but it can be done. Researching currently non-patentable substances would get the same priority as patentable ones, something that is desperately needed. There are additional benefits, but I'll stop describing them here.
2.- The purpose of patent law is supposedly to encourage creativity. That worked well a long time ago, but not now. Patent holders should be individuals or a small group of individuals and have only the right to set the price of the royalty. Manufacturing and use rights should go to anyone willing to pay the royalty. The whole mess of tech patents and arguments about who owns what between large corporations is a terrible waste of resources. Someone or some company wants to use a patent; it should be their right if they pay the royalty. The patent holder should have no rights regarding who can buy the royalties.
1.- Drugs, and perhaps other essential life sustaining devices should not be patentable. The research for development can easily come from a tax on all drugs and be done in universities. Distributing research money to worthwhile research projects requires some thought, but it can be done. Researching currently non-patentable substances would get the same priority as patentable ones, something that is desperately needed. There are additional benefits, but I'll stop describing them here.
2.- The purpose of patent law is supposedly to encourage creativity. That worked well a long time ago, but not now. Patent holders should be individuals or a small group of individuals and have only the right to set the price of the royalty. Manufacturing and use rights should go to anyone willing to pay the royalty. The whole mess of tech patents and arguments about who owns what between large corporations is a terrible waste of resources. Someone or some company wants to use a patent; it should be their right if they pay the royalty. The patent holder should have no rights regarding who can buy the royalties.
11
I've never written anything like this before and I don't know if the times will allow this comment to publish, but this Pearson guy is subhuman sleaze. This is not just a con game, it is an extortion of sick people, including children. His photo should have been included with this article, along with his primary address, and he should be shunned by society. No restaurant should serve him, no club should let him in their doors. People should walk away when they see this piece of trash in their vicinity. He is the lowest criminal masquerading as a businessman. Of course he should be in jail as well, but that would require our inept government to act. In the meantime, we as society should reject him outright. And anyone who does business with him should be treated the same. We can at least choose our associations. And we should start treating the banksters this way as well. If you are not civil, you deserve no place at the table in civil society.
81
Shunning works…wonder how he will get anything done or any service in his miserable existence.
1
Sorry, but there is no hope. Valeant's continued antics and the tone deaf Martin Shkreli (Turing Pharmaceuticals) not withstanding, the industry owns the lawmakers from both parties. PHRMA's outsize role in buying congressional influence means that the new business model, socializing costs (development) by buying successful products developed at publicly funded universities, then marking up prices will not be stifled.
21
Vulture capitalism in the health care field. What could possibly go wrong?
62
A solid and interesting story, but the headline writer/editor blew the story's clever ending.- something akin to a plot spoiler, but for the wrap-up. On the other hand, it shows that the editor actually read the entire story...as most of us probably did. Doesn't the NYTimes have a legal department or advisor that could have spared Mr. Nocera the problem of wondering if the actions of Valenat were legit vs semi-legal or semi-illegal.
4
Can we bring back the practice of shunning? Some people just need to be shunned.
18
Too bad the headline writer gave away the punchline.
3
#1: 'The Wall Street Journal reported that certain Valeant employees work at Philidor using fake names.'
#2: 'Maybe it will all turn out to be innocent.'
Even exclusive of any other evidence, #1 pretty much rules out the possibility of #2. The likelihood of both #1 and #2 being true is practically nil. Something is rotten in Denmark.
#2: 'Maybe it will all turn out to be innocent.'
Even exclusive of any other evidence, #1 pretty much rules out the possibility of #2. The likelihood of both #1 and #2 being true is practically nil. Something is rotten in Denmark.
24
The market is working a somewhat here. The stock is down 58% from its high this and a few of its biggest hedge fund shareholders, are getting creamed. Bill Ackman doubled down on the stock and has lost a bundle. John Paulson is another who's lost a bundle apparently.
The sleaze permeates this company from its CEO to its shareholders.
The sleaze permeates this company from its CEO to its shareholders.
14
This is valeant pharmaceuticals http://tiny.cc/9it84x Now it's really scary.
6
The root cause of this is that the federal government is forbidden to negotiate drug prices for its medicare and medicaid patients.
30
As the baby boomers continue to age, pharma will continue to get more customers. The answer to high drug costs is not always the generic equivalent. Generics may have side effects that are not present in the name brand. Generics may also have absorption issues that make them less effective.
The TPP (Trans Pacific Partnership) deal further supports name brand patent terms, and is extending the patent rights to over a decade. That is not the problem. The problem is the cost.
Governments need to get together and negotiate fair drug prices. Examples like these presented in this article only support more questions: how much profit are they making, and where are the price controls?
The TPP (Trans Pacific Partnership) deal further supports name brand patent terms, and is extending the patent rights to over a decade. That is not the problem. The problem is the cost.
Governments need to get together and negotiate fair drug prices. Examples like these presented in this article only support more questions: how much profit are they making, and where are the price controls?
6
We all have the no-negotiation Part-D bill to thanks for this. It was a clear invitation to this kind of fraud and yet another way for "fiscal conservatives" to shovel money from the taxpayer trough at their preferred constituencies (Pharma and Pharma shareholders); government programs are acceptable if there's a way for the "private" sector to siphon off a killing.
38
And all the GOP congressmen who pushed the no-negotiation part of the bill through Congress later got high paying jobs with Big Pharma. You could look it up!
Just imagine how many billions of dollars that proviso has cost the American tax payer!
Just imagine how many billions of dollars that proviso has cost the American tax payer!
13
Please note the Medicare Part-D bill passed in 2003-- during the first illegitimate term of GW Bush. Thank you SCOTUS-- another price we all paid for this abominable decision in Bush v Gore.
So, What is the purpose of a pharmaceutical company? Increasingly the purpose has been to acquire, extend and hold as many patents as possible to the benifit of its executives and investors. The Research and Development model is a thing of the past. These companies have noticed the huge cuts to R&D in the congressional budget (NIH) and are following suit, consolidating where they can. Republican representatives reward the financial pyramid model but not the invest in the future model. There is no investment in the future. Only "get it while the getting is good" and the public should be concerned about the lack of a pharma pipeline as well and being robbed.
12
Stinks to high heaven. Valeant has always been about financial engineering rather than legit business. Watch this space.
21
"Religion is the opium of the masses." Karl Marx
"We will hang the capitalists with the rope we sold them." V.I. Lenin
"Growth for the sake of growth is the ideology of a cancer cell." Edward Abbey
MOST corporations are sleazy companies run by sleazy people.
The entire idea of the corporation is to have all the rights of citizens and NONE of the responsibilities.
The corporation is the perfect way to avoid all responsibility.
In a way, Corporate Capitalism is like Christianity, the religion in which one can do almost anything, then claim forgiveness, and end up in Heaven even after a life of crime after riding one's camel into heaven seated on the back of a jet-powered camel.
"We will hang the capitalists with the rope we sold them." V.I. Lenin
"Growth for the sake of growth is the ideology of a cancer cell." Edward Abbey
MOST corporations are sleazy companies run by sleazy people.
The entire idea of the corporation is to have all the rights of citizens and NONE of the responsibilities.
The corporation is the perfect way to avoid all responsibility.
In a way, Corporate Capitalism is like Christianity, the religion in which one can do almost anything, then claim forgiveness, and end up in Heaven even after a life of crime after riding one's camel into heaven seated on the back of a jet-powered camel.
30
Send Pearson and his criminal cronies to Guantanamo.
17
Not gonna happen. But remember that Kalief Browder, accused of stealing a backpack, was sent to Rikers Island for three years without being charged.
15
Profits above civic responsibility, the built in problem with capitalism.
34
In nature any parasite knows not to destroy its host. Not so with parasitic capitalists. And since the collapse of the Soviets, "capitalism with a human face," designed to ameliorate the critics of capitalism--and blunt the appeal of communism--has disappeared.
Now we have "capitalism with knobs on!" And the parasites are feeding freely... and WILL kill the host, unless they are prevented. Sanders is the only presidential candidate who appears to appreciate this fundamental reality.
Hillary? She and Bill have been part of the problem for years; how is it she's all of a sudden part of the solution??
Now we have "capitalism with knobs on!" And the parasites are feeding freely... and WILL kill the host, unless they are prevented. Sanders is the only presidential candidate who appears to appreciate this fundamental reality.
Hillary? She and Bill have been part of the problem for years; how is it she's all of a sudden part of the solution??
1
".........Valeant also disclosed that it had paid for an option to buy Philidor, though it had not actually made the purchase......."
And i wonder, by any chance was the price paid for the option pretty much the full price for the purchase price for Philidor?
"............a lengthy conference call with investors in which they insisted Valeant had complied with “applicable law.”
The applicable law probably requires disclosure of ownership relationships in circumstances where parties dealing with Philidor or Valeant should know of the relationship between the companies. Laws of this kind often deem ownership interests subject to an option to purchase in favor of a person to be owned by the person for purposes of determining the obligation to make the required disclosure. The law in question here may be less rigorously drafted, thus leaving a "loophole" which Valeant saw value in exploiting by using the option structure to provide effective ownership (thus creating a requirement to consolidate accounts) without disclosing it.
As is clear from its business model, Valeant is willing to go on the wrong side of lines that many people would draw for the purpose of making as much money as possible. We will see how this works out for them.
And i wonder, by any chance was the price paid for the option pretty much the full price for the purchase price for Philidor?
"............a lengthy conference call with investors in which they insisted Valeant had complied with “applicable law.”
The applicable law probably requires disclosure of ownership relationships in circumstances where parties dealing with Philidor or Valeant should know of the relationship between the companies. Laws of this kind often deem ownership interests subject to an option to purchase in favor of a person to be owned by the person for purposes of determining the obligation to make the required disclosure. The law in question here may be less rigorously drafted, thus leaving a "loophole" which Valeant saw value in exploiting by using the option structure to provide effective ownership (thus creating a requirement to consolidate accounts) without disclosing it.
As is clear from its business model, Valeant is willing to go on the wrong side of lines that many people would draw for the purpose of making as much money as possible. We will see how this works out for them.
17
When a crook comes up with a new mode, and makes stockholders wealthy, they invest. Ethics of sound business practices are never a consideration until some one blows the whistle and then investors bail or cut their losses. The smart money gets in and gets out when a fairy tale develops.
9
Where to begin. "Biovail settled...for $10 million." So no one was held accountable, no one went ot jail or lost their ill-gotten gains. The real world calls that a wink and a nod. "The company raised the price of one heart drug by 525 and another by 212 percent..." In other words, they no longer earned money, they just took it. Which brings me to, what is there to investigate? This is price gouging and corruption pure and simple. And it should be considered theft as well. Yet another reason why the 99 percent is struggling and anxious.
253
Couldn't one consider price gauging for necessary pharmaceuticals--especially in the form of generics--a crime against humanity? By all means jail the guilty executives and their underlings who made this possible--and in general population, where they'll get the treatment they deserve. It's not cruel or unusual punishment.
2
I find it hard to believe that anybody that greedy and sleazy is obeying the law and all the regulations. I think if they look they will find.
15
I clicked on Mr. Nocera's hot link to "allegations by Citron Research" and the information there is far more detailed and makes actions by Valeant, Philidor and another company appear far more suspect. Worth reading!
20
Here's what will happen: Valeant will spend several million of shareholders' dollars settling with the SEC, Pearson will continue to enjoy his freedom and his billions, more research scientists who could have developed lifesaving drugs will be placed out of work, more people whose lives could have been saved will be priced out of the market, and nothing important will change.
This is what happens when you allow the free market to determine the price of people's lives.
This is what happens when you allow the free market to determine the price of people's lives.
379
You forgot one little piece of the puzzle: Pharma companies like Valeant will continue to pour millions of dollars into political campaigns and that, my friend, is how they make sure nothing bad can happen to them.
13
"This is what happens when you allow the free market to determine the price of people's lives." I hate to tell you, but I believe that whatever remnants remained of a free market went away with 2008. What our government (republicans and democrats alike) did in 2008 was to empower not only the investment banks but every other multi-national company that professes to be of American made products and services. If history is any indicator of what to expect, these types of economies just do not cut it. Eventually, they collapse in on themselves (Rome, the Great Depression, banking collapse of 2008). Our government is paid for lock, stock and barrel. Until we the people demand accountability from our politicians the USA cannot be a true democracy, and all of the wealth will continue flowing to the upper echelon. Wake up America!
3
You have it exactly wrong. There is no free market in the health care system. For that you need a willing buyer and a willing seller. In this country the largest single buyer of pharmaceuticals, by far, is Medicare which is is prohibited, BY LAW, from negotiating prices with its suppliers. There you have it! An outrageous law passed by a corrupt congress to directly benefit companies like Bioval. The rest of the corrupt mess that is our health care system simply follows.
1
Hope they are next Enron and goes bust. But why have I been reading about the various deals they made by Times reporters who never suggested that this company which grew gobbling up other companies and firing R&D wasn't another fraud?
4
Gee, it's almost like capitalist enterprise is set up so the folks who rise to the top are the type who have to be watched like pyromaniacs in a powder magazine.
10
My heart trills with happiness overtime I see a greedy pharmaceutical company get dragged through the coals. As a Medicare recipient due to paraplegia, I get preyed on by all facets of the health industry, with major abuse received from drug companies that refused to cut reasonable deals with my insurer under my Part D prescription drug coverage plan. It doesn't help that after spending $4000 in roughly 5 months for home IV co-pays and supplies from a rude IV pharmacy, every visit I make to my primary care physician's office immediately after lunch, I have an opportunity to hear about the DAILY lunch catered to the whole office by the drug companies as part of their "research and development." Question: When are we going to nationalize the drug industry, through contract negotiation done through legislation? Answer: Not until (a) ALL Americans learn we pay the highest Rx prices in the world; and (b) a majority of American voters refuse to continue doing so through their polled refusal to vote for any candidate that does not promise to bring this industry into the realm of morality.
33
Ah, capitalism, what a wonderful idea. If there is a way under our system to make money, legally or semi-legally, or illegally, a group of fancy lawyers in expensive suits will find it. Me? I get a drug I use from Canadian pharmacies at a tiny fraction of the cost of the American version because patent laws apparently don't apply in Canada. Even if it is illegal, so what? Certainly Pfizer would like it to be if you can believe their advertising on the subject, foreign pills made in labs infested with cockroaches and rats, etc., etc. Thanks Joe for a very good muck-raking article, but it is the tip of the iceberg.
If there is money to be made people will make it. Keep healthy people who are in distress because of medical conditions by giving them drugs which they can afford? Get serious. The story by Andrew Pollack cited here proves that generics, when combined to make a "new" drug, can be priced much higher than if the two generics were purchased separately. What a scam. I wonder if there are courses at places like the Wharton School called "How to cheat the public and get away with it" or whatever.
If there is money to be made people will make it. Keep healthy people who are in distress because of medical conditions by giving them drugs which they can afford? Get serious. The story by Andrew Pollack cited here proves that generics, when combined to make a "new" drug, can be priced much higher than if the two generics were purchased separately. What a scam. I wonder if there are courses at places like the Wharton School called "How to cheat the public and get away with it" or whatever.
32
To the extent that people enter science fields with some amount of idealism and a drive for discovery and to develop new helpful products, I think these kinds of scandals could dampen such enthusiasm if drug research comes to be seen as a specialized kind of support for big business to make money off of other people's problems -- drug research scientists could start looking like the first line of workers in the subprime mortgage scandals, the people who make it possible for others to engage in exploitation. I think it could sully the whole industry if the industry becomes known as being more oriented towards profiteering than towards science and research and development. I point this out because it might give more people a sense that this matters to the quality of drug research down the line -- if it stops attracting the same people into the field if the field becomes too tainted, we may not get the same quality of expertise and results as we've had in the past.
9
Well said. I have worked in a consulting capacity with most major pharmaceutical companies for more than 30 years. Their R&D teams comprise researchers of integrity whose goal is to develop treatments that will either prevent diseases or enhance the quality of life for those inflicted with them.
These are scientists deeply committed to their mission. Questionable, corrupt and criminal business behaviours invariably are the work of executives and other employees far removed from the labs.
These are scientists deeply committed to their mission. Questionable, corrupt and criminal business behaviours invariably are the work of executives and other employees far removed from the labs.
10
The back story on this story and others like it in our society is, that this is what you get when you allow ownership and privatization of "businesses" that should really be considered endeavors for the public good. The right has, for many years, fed the public a steady diet of "business is more efficient than government". This is not true most of the time. Further it has reached proportions that it are almost treasonous in turning the unthinking against their government. Judging by the recent auto rescue and bank fiascoes it is even possible that that many businesses are not even efficient at making profits for their investors (the area in which they claim the greatest success).
29
Beyond forms, laws and regulations, governments produce nothing. They have no experience in producing anything and their level of competence in regulating and administering the functions they are charged with is abysmal. They cannot even deliver the mail properly. Drug therapies influence quality of life and the make difference between life and death. Those are not responsibilities any government should be trusted with.
Ridiculous! Ever hear about the NIH?
1
mtunzini, it was government that put us on the Moon. Whereas most private enterprise, in one way or another, is sucking at the public teat, whether through relying on government to handle its 'externalities' - e.g., fast-food joints depending on government to clean up their litter (one possible example of many). Or government contracts:
BTW I've had private carriers, FedEx and UPS, refuse, lose, and damage mail. They just charge a lot more to do it.
Regurgitating the same old libertarian blat doesn't make it true.
BTW I've had private carriers, FedEx and UPS, refuse, lose, and damage mail. They just charge a lot more to do it.
Regurgitating the same old libertarian blat doesn't make it true.
7
Enough is simply enough. After these recent egregious and obscene increases in drug prices will people finally realize that no aspect of people's health should be traded on the stock market? A single-payer health system plus government-funded drug research and development would cost more in taxes, sure, but those taxes should be based on income and we'd save by cutting out the middlemen, such as for-profit insurance companies and we couldn't be putting taxes to better use than for our own health and well being and that of our loved ones and fellow citizens.
46
On October 17, 2015 The Hill reported that Hillary Clinton received more campaign support that any other presidential candidate in the current campaign cycle in the amount of $168,000. But reported campaign contributions do not include the other part of the iceberg of affiliated contributors. And how about the millions that the drug companies shoveled into Clinton Foundation? While talking tough about big pharma abuses, Clinton solicits and accepts their money. A polite word for this hypocracy is triangulation. The reality in politics is that those who pay the piper call the tune.
7
A distinction needs to be made between companies that buy up smaller pharmaceutical manufacturers and jack up prices on existing and out of patent drugs, and those that at great risk and expense develop new ones. One solution to this would be to have reciprocity of drug approval with other advanced countries whose FDA equivalents can be trusted, such as Germany, Switzerland or England. Then, a generic approved over there can be marketed here, eliminating the windfall period when an out of patent drug can be sold for an exorbitant profit. To establish price controls across the board hurts people with as yet untreatable illnesses
15
Have we chosen to be a Capitalist society? Three times the abuses of capitalism rose to such a major issue that national elections were waged over the issue. The Slavery economy, Teddy Roosevelt's Progressives and the Antitrust movement after the excesses of the Robber Barons and FDR after the excesses of Wall Street and the Great Depression. All three times the American people rejected pure capitalism and voted for a Mixed Economy of mostly free markets with sufficient government regulation and social welfare programs to avoid the excesses but unfortunately, these rejections came only after major damage was done.
Yet again, the forces of greed and avarice have risen to try and overthrow the Mixed Economy that the American people have voted for multiple times. This time they are doing it through the backdoor of Lobbyists, front organizations like ALEC, the National Chamber of Commerce and the purchasing of politicians through unlimited campaign contributions. Hopefully, this time we will reject them before they commit the type of damage that they have done previously.
Yet again, the forces of greed and avarice have risen to try and overthrow the Mixed Economy that the American people have voted for multiple times. This time they are doing it through the backdoor of Lobbyists, front organizations like ALEC, the National Chamber of Commerce and the purchasing of politicians through unlimited campaign contributions. Hopefully, this time we will reject them before they commit the type of damage that they have done previously.
12
The credo of todays CEO is that he must watch over the interests of his shareholders. By this standard, Mr. Pearson is an excellent business leader. The fact that the small percentage of people who rely on these drugs are being crushed by the addition cost does not enter into the equation. We have chosen to be a Capitalist society and Mr. Nocera should get over it.
4
The stock has plunged from 262 to 110. I don't think the stockholders are very happy either.
29
Have we chosen to be a capitalist society? The rising popularity of Dem candidate Bernie Sanders would seem to repudiate that. While I support a truly free market economy (you know, one with reasonable regulation and without corporate welfare), I am not happy with unregulated capitalism, which destroys the environment, people and other living beings in the process of making the greedy more comfortable. We live in a sick society, and best to admit, and change it.
85
While "we" may have "have chosen to be a Capitalist society" *I* certainly did not choose this type of capitalism. It seems that others are of similar opinion. Many people (we) want something different. Perhaps you are the one who needs to "get over it".
This is some combination of extortion, blackmail,, etc., It is *not* informed consent. It is most certainly NOT "rule of the people, by the people and for the people". It also does NOT "promote the general welfare", etc., etc.
The "Strict Constructionists and Tea Party louts who pretend to champion the Constitution might want to get down from their tree. This kind of behavior was not even conceivable when the US was being formed.
Also - look though I did, I have not been able to locate a single word or phrase in the Constitution about any specific kind of economic "ism" the US is supposed to run on.
Seems to me that we are permitted to choose to use any/all "isms" as well as any combination including, but not limited to, capitalism, socialism, ...
I chose to NOT use "squeeze as much as you can while giving as little as possible."
But that's just me...
This is some combination of extortion, blackmail,, etc., It is *not* informed consent. It is most certainly NOT "rule of the people, by the people and for the people". It also does NOT "promote the general welfare", etc., etc.
The "Strict Constructionists and Tea Party louts who pretend to champion the Constitution might want to get down from their tree. This kind of behavior was not even conceivable when the US was being formed.
Also - look though I did, I have not been able to locate a single word or phrase in the Constitution about any specific kind of economic "ism" the US is supposed to run on.
Seems to me that we are permitted to choose to use any/all "isms" as well as any combination including, but not limited to, capitalism, socialism, ...
I chose to NOT use "squeeze as much as you can while giving as little as possible."
But that's just me...
140
Last night while I was reading my wife watched some television. We both commented that the number of ads for prescription drugs was outrageous, and so it is. Our Declaration of Independence lists life as an "unalienable right" to be protected by the government. And nothing is more necessary to life for many people than prescription medicines. Perhaps it is time for us to consider that, as pharmaceutical companies continue to drop R&D in favor of marketing and distribution, medical R&D should be in the public domain, and the profit component of drugs done away with. Too many bad actors are engorging themselves at the expense of millions, and it is time to stop it. That goes for healthcare overall, as it already has in more sophisticated countries.
148
We simply need to socialize healthcare and let our government negotiate directly with pharma companies over the price of drugs. The is what European countries do. Generic medicines should be mandated over non-generics unless your physician justifies a sound medical reason that warrants the extra expense. All advertising should be banned. This is medicine, not a consumer product and doctors should be advising patients, not drug companies. Too many drugs are being developed and marketed as products to gullible consumers.
177
Yes, too many ads for drugs that carry warnings that make the disease or illness itself seem safer. Lots of bad actors pushing "free market" nonsense that allows and supports the worst abuses as we see in the big pharma world. There is no such thing as a free market but is sounds appealing to many.
To aid the Corporate masters the Republican leadership has corrupted words like "freedom" as in Freedom Caucus that really has no interest in freedom, except for themselves. So, the unfettered capitalism they insist on maintains its grip on our lives and our country. Watch what they do, not what the say is a good rule.
Today the Republican leadership strikes me as an evil cabal much as what is depicted in the TV show Blacklist. There is no substitute for capitalism but it needs regulation to prevent the abuses that are inevitable when left to the Koch's of the world.
To aid the Corporate masters the Republican leadership has corrupted words like "freedom" as in Freedom Caucus that really has no interest in freedom, except for themselves. So, the unfettered capitalism they insist on maintains its grip on our lives and our country. Watch what they do, not what the say is a good rule.
Today the Republican leadership strikes me as an evil cabal much as what is depicted in the TV show Blacklist. There is no substitute for capitalism but it needs regulation to prevent the abuses that are inevitable when left to the Koch's of the world.
17
Of course our gutless Congress will do nothing to stop the price gouging on generic drugs, but how's this for an idea. Just as with tobacco decades ago, why not ban all pharmaceutical drug ads from the airwaves? Force companies to spend profits on R&D with the savings from not advertising. I will reach for the mute button on my TV less and maybe spend less for all the generics I take whose prices have gone into the stratosphere.
19
Where is the line Valeant crossed into bad behavior? Valeant is only doing what Pharma has been doing for a very long time but more openly. The line crossed was not by Valeant but by Pharma long ago when it devised strategies to extend patents with me-too drugs created with no additional medical efficacy and are nothing but legal containers to charge more longer. The line was crossed when Pharma bought up and killed generic drug manufacturers. The line was crossed when it rushes to market drugs and medical devices with fixed research data to reap benefits quickly before the known dangers are borne out in the general population.
The only thing Valeant did that Pharma isn't already doing is doing it without the cover of a big corporate structure to hide or disguise what it's doing. If Valeant is sleazy, then most of Pharma is sleazy too, maybe even more so.
The only thing Valeant did that Pharma isn't already doing is doing it without the cover of a big corporate structure to hide or disguise what it's doing. If Valeant is sleazy, then most of Pharma is sleazy too, maybe even more so.
60
The model being used by these pharmaceutical companies is more like patent trolling than the traditional Engulf an Devour model of corporate takeover.
Buy an asset and extort customers. It is not hard to believe that a company that would buy a drug, merely to jack up its price, would control the delivery channel to assure distribution.
These moves are Dickensian capitalism. We wrote laws to protect consumers, to assure that market power could not be manipulated unfairly. These laws are more than 100 years old. It is time to start looking at the Roosevelt presidency - Teddy, not FDR - and remember why we had to rein in capitalism in the first place.
We wrote laws, because there is no reason to believe that capitalism and ethical behavior run hand in hand. The market does not self-regulate. It is actively regulated by the will of the people. It is time to find that will again.
Buy an asset and extort customers. It is not hard to believe that a company that would buy a drug, merely to jack up its price, would control the delivery channel to assure distribution.
These moves are Dickensian capitalism. We wrote laws to protect consumers, to assure that market power could not be manipulated unfairly. These laws are more than 100 years old. It is time to start looking at the Roosevelt presidency - Teddy, not FDR - and remember why we had to rein in capitalism in the first place.
We wrote laws, because there is no reason to believe that capitalism and ethical behavior run hand in hand. The market does not self-regulate. It is actively regulated by the will of the people. It is time to find that will again.
121
14% of revenue is a hefty percentage to spend on R&D?
5
The average is 18%. Many of the largest companies spend over 20% and some of the smaller ones working on biologicals spend close to 50%. To say that 14% is hefty is inaccurate. Clearly the 3% being spent now and who knows what that represents in terms of activity, should raise a lot of red flags with investors and government.
The only legitimate reason for society to be willing to pay exorbitant prices for drugs today is to fund the R&D to develop disease cures and treatment regimens for chronic ailments. Most legitimate pharmaceutical companies follow this model and focus on creating a pipeline of future products. Obviously they want them all to be blockbusters and bring in huge profits, but so long as they continue to spend more than 20% of revenues on new and improved products the model can work.
The alternative is to control drug costs to the point where there is no industry R&D. Then we will need to rely solely on organizations such as the NIH and their counterparts throughout the world to develop new drugs. The slow process of drug development we see today might appear supersonic compared to that scenario.
The only legitimate reason for society to be willing to pay exorbitant prices for drugs today is to fund the R&D to develop disease cures and treatment regimens for chronic ailments. Most legitimate pharmaceutical companies follow this model and focus on creating a pipeline of future products. Obviously they want them all to be blockbusters and bring in huge profits, but so long as they continue to spend more than 20% of revenues on new and improved products the model can work.
The alternative is to control drug costs to the point where there is no industry R&D. Then we will need to rely solely on organizations such as the NIH and their counterparts throughout the world to develop new drugs. The slow process of drug development we see today might appear supersonic compared to that scenario.
15
And I think another important statistic to consider is that out of 10,000 compounds invented only one will actually become a drug that is approved by the FDA. You can have something that looks fabulous at the cellular level that then kills the first animal model - maybe even as it is being given. Then something that looks fabulous in a phase 1 study turns out not to actually be effective. Or something that works by an entirely new mechanism turns out to release some horrific, and completely unexpected side effect. It's the bad actors like Valeant that need to be taken out - not pharma in general. Amazing break throughs are happening right now.
17
http://www.thedailybeast.com/articles/2015/09/21/martin-shkreli-is-big-p...
Valeant's tactics did not go unnoticed by Wall Street sleazes. A copycat is Turing Pharmaceuticals recently in the news for raising the price of a life saving drug from 13.50$ to 750$ after acquiring it. Turing's CEO is a 32 year old former hedge fund manager, Martin Skreli.
These companies exist purely to extort money from the rest of the healthcare industry which is ultimately born by patients and tax payers. When Wall Streeters like Skreli sees an easy chance to make money, they will. This is not a bunch known for any sort of morality. New laws must be passed to curb this sort of behaviors.
Valeant's tactics did not go unnoticed by Wall Street sleazes. A copycat is Turing Pharmaceuticals recently in the news for raising the price of a life saving drug from 13.50$ to 750$ after acquiring it. Turing's CEO is a 32 year old former hedge fund manager, Martin Skreli.
These companies exist purely to extort money from the rest of the healthcare industry which is ultimately born by patients and tax payers. When Wall Streeters like Skreli sees an easy chance to make money, they will. This is not a bunch known for any sort of morality. New laws must be passed to curb this sort of behaviors.
106
New laws? Not a chance when "free enterprise" has a God-given right to trample on the "little people" (the 99.99%). Is this a great country, or what?!
66
Nocera is at his best when muckraking. Kudos on this piece. It fires up his sense of injustice when people do not play fair. So much of the world doesn't play fair, so it keeps him very busy. But this is the job of a good journalist and Nocera seems to be doing his job. Valeant is being exposed..one in a long list of corporations, whose nefarious activities need to be exposed. I am encouraged, as I see the world fight back..the election of Trudeau, the British electing a lefty, etc. It's not that business is all evil. But a sense of morality has been greatly lacking, and made worse with deregulation. It's time to reign these guys back in again.
196
@ Carolyn - well said and since nowadays I have no experience with buying meds I will add this about buying them in Sweden. I walk to the nearest Apoteket, take a kölapp (number), see the number and go to the window where a young pharmacist with Arabic name Nada* is there to help me. I give her my photo ID (mandatory in Sweden) and she calls up my prescriptions and can see how many times each has been used. Zip I have them, simple things like Trombyl (baby aspirin in heart shape). They cost so little I am always amazed. Never at Rite Aid! I say "shukran" and am on my way.
*Nada in Arabic refers to the drops of water on a flower in the early morning, very poetic and not at all like the nothing of Spanish.
Larry
*Nada in Arabic refers to the drops of water on a flower in the early morning, very poetic and not at all like the nothing of Spanish.
Larry
8
Valeant Pharmaceuticals is sleazy but not because it appears to be a scam. If it was legit, and the investors were ecstatic, it would on the cover of a thousand business magazines.
No, it is sleazy because it is playing with sick people's lives, which shouldn't be tolerated in a civilized society.
No, it is sleazy because it is playing with sick people's lives, which shouldn't be tolerated in a civilized society.
131
Now we know where we are in relation to "civilized society."
26
It's also sleazy becasue it is not earning money. It's just taking it.
7
Maybe, Valeant, but what about a private company snagging big wig investors and Durectors. Theranos?
Perhaps as long as there has been commerce, there have been Pirates in our midst, who twist ' applicable law ' into gray areas and use sleazy tactics to justify outright theft, outraging consumers, coarsening life, and (if not caught in time) perverting industries by forcing competitors to adopt copy-cat Piracy, or (through consultants and ' B ' school cases) perverting not just 1-2 industries, but entire commercial systems from top to bottom.
All hail the regulators tasked with saving us from ' self-regulating ' companies/industries where CEO's who amass the biggest piles are paragons and citizens who choose to not be Pirates ' legally ' victimizing their fellow citizens are adjudged to be failures in comparison.
All hail the regulators tasked with saving us from ' self-regulating ' companies/industries where CEO's who amass the biggest piles are paragons and citizens who choose to not be Pirates ' legally ' victimizing their fellow citizens are adjudged to be failures in comparison.
52
Wouldn't that be hilarious if Bill Ackman, long and getting longer, got buried by this lipstick wearing pig. A little payback for his hubris? This is just a tip of the iceberg of legerdemain in the corporate sector. At some point the charlatans are unmasked. Unfortunately they usually don't pay the price, Enron as the exception. But maybe they can lose some money and see their empire crumble. That will have to be good enough until we get some prosecutors with intestinal fortitude. Listening Preet?
18
Pearson. Now there is somebody thar belongs in jail. Instead of holding folks up one at a time he has managed a way to do it wholesale. It sort of begins to make you think about nationalizing the pharmaceutical industry. I also wonder what the insurance companies think of this.
78
I wonder if insurance companies are complicit in this? After all, they don't get stuck with rising costs- they simply pass them along to employers and to individuals who are mandated to purchase health insurance. I recently priced health insurance on the Massachusetts exchange. The cheapest coverage I could find was $1000.00/month.
11
This is what you get with small government. Few regulators, few regulations. Corporate criminals pay a fine with shareholder money for last year's crime while working on this year's crime.
394
jlalbrecht - You leave out the part where corporate criminals/pirates direct their ill-gotten gains to lower their present taxes, erase estate/inheritance taxes for future generations, and create ' carried interest ' loop-holes through donations to office-holders and lobbying efforts; efforts in rarefied strata where $300,000 donations are the equivalent of $21.17 to the typical American household:
http://www.nytimes.com/interactive/2015/10/11/us/politics/2016-president...
And any fines paid by the (serial) corporate criminals/pirates are almost always deducted from what corporations owe in taxes, so typical Americans subsidize those fines through their own taxes, as well as typical Americans accepting lower 401-K stock values for such corporations diverting cash into fines instead of using the cash to invest in their businesses - a lose/lose situation for almost everyone except the corporate criminals/pirates, their legal teams, and their publicists.
http://www.nytimes.com/interactive/2015/10/11/us/politics/2016-president...
And any fines paid by the (serial) corporate criminals/pirates are almost always deducted from what corporations owe in taxes, so typical Americans subsidize those fines through their own taxes, as well as typical Americans accepting lower 401-K stock values for such corporations diverting cash into fines instead of using the cash to invest in their businesses - a lose/lose situation for almost everyone except the corporate criminals/pirates, their legal teams, and their publicists.
98
Their business plan has a name; it's called 'extortion'.
203
If it is, then hopefully we’ve learned our lesson and our Justice Dept. won’t destroy a major accounting firm by charging it as a “criminal enterprise” merely because Justice Dept. lawyers were offended by the arrogance of the firm’s senior management. What we did to Arthur Andersen over Enron was like indicting a gun for murder.
Valeant and others in pharmaceuticals and other patent acquirers who do nothing actually useful represent a failure of sensible regulation. They shouldn’t be permitted to exist if their sole purpose in acquiring patents is to exploit them far more intensively without any attempts to contribute productive innovation to the industries in which they operate. You’d think we’d be bright enough to figure out how to do that, particularly as our regulators are in the hands of a political party and ideology that believes in ROBUST regulation.
Calling corporate behavior that might or might not be lawful “sleazy” doesn’t get us there. We need to change the law to strongly disincentivize bad players to play badly.
Valeant and others in pharmaceuticals and other patent acquirers who do nothing actually useful represent a failure of sensible regulation. They shouldn’t be permitted to exist if their sole purpose in acquiring patents is to exploit them far more intensively without any attempts to contribute productive innovation to the industries in which they operate. You’d think we’d be bright enough to figure out how to do that, particularly as our regulators are in the hands of a political party and ideology that believes in ROBUST regulation.
Calling corporate behavior that might or might not be lawful “sleazy” doesn’t get us there. We need to change the law to strongly disincentivize bad players to play badly.
16
"What we did to Arthur Andersen over Enron was like indicting a gun for murder."
This analogy makes no sense. Corporations are made of people. In fact, Mitt Romney thinks corporations are people. A gun, on the other hand, is not a person.
This analogy makes no sense. Corporations are made of people. In fact, Mitt Romney thinks corporations are people. A gun, on the other hand, is not a person.
19
But you omit the fact that the GOP (the other party) opposes the regulators. Thereby enabling the sleaze.
66
Arthur Andersen, and the other big accounting firms and rating agencies should suffer severe punishment when they engage in massive fraud also. Hopefully, the demise of AA was a lesson to the other accounting firms of what could happen if they engage in criminal conspiracies.
8
The most successful criminals wear suits.
255
Great observation, I think I heard it best once, easier to rob someone with the point of pen than the point of a gun.
6
Paul, that was from the Woody Guthrie song "Pretty Boy Floyd" -- highly relevant these days:
Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.
Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.
2
"Biovail settled the case for $10 million."
Statements like the one above need to read something like, "Biovail settled the case for $10 million and two of its executives went to jail."
When executives risk their personal freedom, and perhaps their personal assets as well, then the kind of behavior Nocera describes will stop. Fines paid out of corporate accounts are meaningless.
Statements like the one above need to read something like, "Biovail settled the case for $10 million and two of its executives went to jail."
When executives risk their personal freedom, and perhaps their personal assets as well, then the kind of behavior Nocera describes will stop. Fines paid out of corporate accounts are meaningless.
324
It seems that the same rot that brought down the banking industry in 2008, is spreading to the pharmaceutical companies. Greed. Sooner or later government will be forced to serioiusly regulate both industries. Pulling value out of the general economy, which is what both industries are doing, and "eating their seed corn" as what companies do, whether by underpaying workers, firing scientists, hiring foreign workers to take over American jobs, or over charging for products' will eventually backfire. You can not continue to extract money out of an economy for high stock prices and huge CEO bonus and not expect a serious backlash. Let's hope ithe backlash comes sooner rather than later.
160