• Tips gratefully accepted here. Thanks!:

  • Recent Comments

    Seagrl on Brief observations, Hillary Cl…
    bellecat on Brief observations, Hillary Cl…
    Seagrl on Brief observations, Hillary Cl…
    Seagrl on Brief observations, Hillary Cl…
    Ivory Bill Woodpecke… on Brief observations, Hillary Cl…
    Catscatscats on Brief observations, Hillary Cl…
    Catscatscats on Brief observations, Hillary Cl…
    William on Brief observations, Hillary Cl…
    William on Brief observations, Hillary Cl…
    riverdaughter on Brief observations, Hillary Cl…
    riverdaughter on Brief observations, Hillary Cl…
    Catscatscats on Brief observations, Hillary Cl…
    HerstoryRepeating on Brief observations, Hillary Cl…
    Catscatscats on Brief observations, Hillary Cl…
    Propertius on Brief observations, Hillary Cl…
  • Categories


  • Tags

    abortion Add new tag Afghanistan Al Franken Anglachel Atrios bankers Barack Obama Bernie Sanders big pharma Bill Clinton cocktails Conflucians Say Dailykos Democratic Party Democrats Digby DNC Donald Trump Donna Brazile Economy Elizabeth Warren feminism Florida Fox News General Glenn Beck Glenn Greenwald Goldman Sachs health care Health Care Reform Hillary Clinton Howard Dean John Edwards John McCain Jon Corzine Karl Rove Matt Taibbi Media medicare Michelle Obama Michigan misogyny Mitt Romney Morning Edition Morning News Links Nancy Pelosi New Jersey news NO WE WON'T Obama Obamacare OccupyWallStreet occupy wall street Open thread Paul Krugman Politics Presidential Election 2008 PUMA racism Republicans research Sarah Palin sexism Single Payer snark Social Security Supreme Court Terry Gross Texas Tim Geithner unemployment Wall Street WikiLeaks women
  • Archives

  • History

    October 2019
    S M T W T F S
    « Sep    
     12345
    6789101112
    13141516171819
    20212223242526
    2728293031  
  • RSS Paul Krugman: Conscience of a Liberal

  • The Confluence

    The Confluence

  • RSS Suburban Guerrilla

  • RSS Ian Welsh

    • Week-end Wrap – Political Economy – October 20, 2019
      by Tony Wikrent North Carolina Democratic Party Progressive Caucus Strategic Political Economy Economist Mariana Mazzucato has demonstrated that the real driver of innovation isn’t lone geniuses but state investment. [Wired, via The Big Picture 10-19-19] ….Mazzucato, an Italian-American economist who had spent decades researching the economics of innovation […]
  • Top Posts

  • Advertisements

Martin Shkreli is low hanging fruit

frances-mcdormand-marge-olmstead-gunderson-fargoSo, Martin Shkreli has been arrested, but not for being the biggest parasite on sick people “all for a little bit of money”.  It was for sucking a startup dry in order to cover up his hedge fund losses.

There’s a reason why I’m not in pharma anymore. My options were limited and one of them was to go into a startup where the nature of the work is the same, the overhead is very high, the money is super tight and there is always the possibility that the vulture capitalists will treat the company as an object and not composed of real people. With real lives. And real careers. And real children.

But Martin Shkreli’s “Mine, Mine, All Mine!” business model is not unique. Before I explain what currently drives the drug industry, let me make two things clear: 1.) it wasn’t always like this and 2.) the lab rats are not to blame.

Basically, the drug industry has moved away from small molecule drug discovery. The industry is moving towards biological drugs for cancer and orphan diseases. There are a couple of reasons for this. They are easier to get through the drug approval process. If there are major side effects, the patients are the last people in the world to sue or complain. And the patients are desperate. They will pay whatever it takes.

Now, I’m all for biologicals for many good reasons. They have a good chance of working in the case of cancers and metabolic diseases. But while  all of the capital has flowed to these types of therapies, the stuff that most people suffer with on a day to day basis have gone without funding, and the people who used to work on those therapies have been out of a job.

So, if you have high blood pressure, schizophrenia or need an antibiotic, you are SOL.

The thing about Martin is that he’s just the most visible and egregious example of greed. And I’m not letting the left off the hook for this disaster. If it hadn’t been for the notorious class action lawsuits (please, don’t even start, you know what I’m talking about. We’re not talking criminal negligence here) we might not have ended up here.

I’ve written about what I think is going to happen to the cost of drugs before and one of these days, I’m going to properly tag and categorize my previous posts on the subject. But let me recap it here. Drug prices of all types are going to continue to rise. The new biological drugs are going to start off being astronomically expensive. The cost of generics are going to go up and up and up. Here’s why: brand name drugs and blockbusters are going off patent rapidly. Ohhh, you say, that means the generics that they turn into will be cheaper. Ha! Say I, you forgot your basic economics 101 course section on supply and demand.

The supply of new drugs with fewer side effects is going to go down. New small molecule drugs get approved rarely and the patent time left for them is short. So to recoup the cost of research, which is substantial, the cost of the drug will be high. Meanwhile, the brand names that have become generics are going to become the play things of people who are much more sophisticated and low profile than Martin Shkreli. The drugs still need to be made in FDA inspected and regulated facilities. That costs money. That money can’t be recouped from a cheap generic. And without blockbusters to keep the lights on, the cost of the generics will need to increase.

I’m just picturing a series of rolling blackouts on some of these drugs in the future. You need a blood pressure med? Darn, that production facility needed to be taken offline for maintenance. It might not be maintenance but there will be some excuse for why there is a shortage and the price needs to go up. And up. And up. They’ll start blaming it on regulation. Hey! A Twofer. If the shortage of your blood pressure med is caused by the federales, why not make it easier to get that drug made in China? It’s generic, after all. You’ll never know the difference. And besides, what would you prefer? Some outdated federal regulatory process on a brand name drug that has gone generic or a stroke?

I don’t know about you, but I want my drugs regulated.

This is the financialization of the pharma industry. Twenty years ago, we wouldn’t have been concerned about hedge funds getting involved in pharma to the same degree that they have. That was before the MBA’s moved in ad decided that R&D staff had it too easy, they weren’t working hard enough and luxuriated in spacious labs instead of cramped cube farms like the accountants and marketing people in the business unit down the road. (yes, I have actually heard this childish and clueless complaint from the MBAs) It should be against the law for petty selfish people to run an industry as important as the drug industry. But you can be sure that the big players are glad for Martin Shkreli to take one for the team so they can get back to business in peace and quiet.

They don’t need the attention.

Well, until the bacterial apocalypse arrives

Advertisements

We now begin the chaos portion of our program

Did you see the front page of the NYTimes this morning? It’s looking pretty grim. There’s Ferguson, the resignation of Chuck Hagel accompanied by harsh words about Obama’s national security policy, and the soaring costs of generic drugs. I told you guys that generics were going to start increasing in price a couple of years ago.

Is it just me or does it seem like the whole shebang is unravelling rather quickly these days?

Now, I’m not going to say that all of these problems are due to Obama’s naivete, inexperience and incompetence. But I think it is time we put a mute button on anyone proposing we replace him in 2016 with yet another untested, inexperienced first term senator just because they can’t stand, and have a visceral reaction to, the most logical alternative.

Need Yves Smith’s analysis of new Pfizer hostile takeover of Astra-Zeneca

Derek Lowe at In the Pipeline has a post on Pfizer’s hostile move on Astra-Zeneca:

What the hell is Ian Read thinking? Pfizer is apparently going hostile with their attempt to buy out AstraZeneca, all but ensuring that the deal, if it goes through, will take place at the highest price and in the messiest fashion that it possibly could. And for what?

If you’ve been following Pharmageddon from the beginning, you will know that Astra-Zeneca’s fall off the “patent cliff” was one of the steepest in the industry.  The patent cliff is the term used in the industry that refers to the expiration of patents for the major blockbuster drugs.

Patent Cliff by company since 2010.

 

Weirdly, most blockbuster patents have expired within the past decade because they were discovered in the 90’s, the golden age of drug research.  If you’re wondering why your blood pressure meds are suddenly so affordable, that’s why.  They’re generic now.  Pharma can’t make as much money off them anymore.  Great!, you say.  And it probably is great, to some extent.  The problem is there is not a lot in the pipeline to replace them, that is, if you’re interested in more effective drugs with fewer side effects.  There are several reasons for this that I’ve discussed in previous posts but the primary cause is NOT for lack of trying.  Researchers have seemingly endless dogged determination to preserver in  the face of failure after failure.  The problem is that research has to deal with *two* impossible systems: the complex biology and the self-serving, clueless managerial/finance class.  And the underfunded and politicized FDA.  Make that THREE impossible systems.  And the class action law industry.  FOUR! It all adds up to unnecessarily and ridiculously expensive drugs.  But I digress.

So, according to Derek, Astra had some really rough years, laid off a ton of people in Delaware and all around the world, but hired a new guy in 2012 to turn the ship around and has plans to consolidate a tiny fraction of their research unit in Cambridge, MA where no one really wants to work because it’s a.) expensive, b.) a pain in the ass commute and c.) an insecure career environment for researchers.  MBAs really are a bunch of status snob lemmings, I swear.  Or magpies chasing the latest shiny thing.

My bad, that’s Cambridge, UK where AZ wants to set up its stripped down R&D division.  It’s probably just as attractive to the relocated researchers (You happy few!  You band of brothers!) as the American Cambridge.

Derek makes a good point in that Pfizer has a lot of money to spend on the small, nimble biotech startups that MBA types have told the analysts are supposed to be able to generate a s^&*load of drugs to inlicense.  They’re like unicorns, these little startups, or like perfectly elastic collisions of particles in a box.  Theoretically, they exist but in the real world?  ehhhhh, not so much.  Drugs rarely emerge from these tiny incubators fully formed because, helloooooo, Silicon Valley, drug discovery is NOT like writing code for a new Facebook.  But you’ll find out in the next couple of years.  Just sit in on one of the project teams while the biologists drone on and on and on about how much to tweak the components of their confirmatory and cell based assays to make them reproducible and it will quickly dawn on you that drug discovery makes coding look like Chutes and Ladders.  Even so, we’ve got to wonder why Pfizer is choosing to forgo spending some of their billions on the biotech startups in order to sit on a pile of cash.  Where is the drive for innovation we’re always hearing so much about?

Anyway, where was I?  After pondering the problem for awhile, Derek hypothesizes that Pfizer is buying Astra-Zeneca, a foreign owned company, to hide its taxable profits from the US government.  Or the British government.  It’s like some British, Swedish, American threesome, which initially sounds like a good time for everyone except the citizens who actually count on corporations to respect them. It’s a rather strong accusation but Derek says he never wants to work for Pfizer anyway.  That’s Ok for him but my pension was acquired by Pfizer when it gobbled up Wyeth and then proceeded to lay off every one of the people I used to work with.  I’m kind of concerned with this wobbly third leg of my rapidly disappearing retirement stool so if Pfizer is up to something, I’d like to know what the heck it is.

The remaining survivors in research at Astra-Zeneca can see what’s coming.  They must be busily rewriting their CVs and networking instead of finishing that reaction or fishing the crystals out of solution to send to the synchrotron.  What a lovely way to spend your hours in the lab.  And the industry wonders why there is nothing in the pipeline after 20 years of this crap.

What this research project team really needs is a financially nerdly Yves Smith type who can look at the details of the proposed takeover and report back in a meeting to tell us what’s up.  More to the point, what does the UK’s new tax rates for foreign profits say about whether the conservative government is trying to make Britain into a sleeker global tax haven?  I’m just a chemist.  Money is not my area of expertise.  This project team needs a finance specialist.