There is no free lunch

Discussion in 'Valeant Pharmaceuticals' started by Guess what, Nov 8, 2015 at 8:19 PM.

  1. Guess what

    Guess what new user

    Joined:
    Nov 2, 2015
    Messages:
    13
    Likes Received:
    0
    Milton Friedman, made this phrase popular:

    There is NO such thing as a free lunch.

    What Valeant has done, and what the Hedge Fund managers have applauded, is the capacity of Pearsons to EXPLOIT loopholes and inefficiencies in the American health insurance/medication/pharmaceutical SYSTEM AND MARKET. Exploiting loopholes and inefficiencies in the way that they have done, add nothing of value to the patients or to society. They aren't trying to make the system. In fact, Ackman says Pearson should have spent more money on lobbyists - to promote their business model to exploit the existing loopholes and inefficiencies in the American health insurance, medication/pharmaceutical system. Just so they can make more money. Not because it's actually good for the patients or for society.

    As far as I can understand the Valeant and Turing model, there are 2 types of generic drugs

    (a) generic drugs like Nitropress and Isuprel and Daraprim - which are REQUIRED MEDICATION for certain small number of patients with certain conditions; and
    (b) generic "drugs" like Obagi - a Retin A cream for acne and skin conditions.

    If ever there is proof that markets are inefficient, and requires on-going tweaking, Valeant and Turing are examples of this.

    (1) the supply of medications is NOT a free market. FDA approvals are needed before certain drugs can be sold - even for certain generic drugs. FDA has put in place certain regulations to protect the consumer and patients. For e.g. medications must be manufactured in Good Manufacturing Practices certified facilities. To get a GMP certification requires a big investment for many generic drugs manufacturers.

    (2) As I understand it, FDA also required re-testing of certain types of generic drugs for safety purposes. In order to protect the patients, delays and costs are added to the production of generic medications. Retesting newly produced generic drugs, submitting test results, waiting for approvals, cause delays in getting a generic drug manufactured by a company who had not previously manufactured the drug before, into the market. I understand this can take up to 4 years.

    (3) The cost of testing, retesting, submitting for approvals, getting GMP certifications, plus marketing, plus distribution costs, plus other overheads, all adds to costs which the generic drugs manufacturer recovers generic drugs. If you are a manufacturer, it's not worth your while to incur these costs for a small number of patients. Hence, there are generic drugs which still only have one or two manufacturers.

    (4) This then is where the Valeants and Turings of the world come in. They understood some of the barriers to entry - at least in the short to medium term. They bought these companies and jacked up the prices. They figure that the insurance companies can be persuaded to pay. May be, they even thought that the ordinary patients wouldn't have to pay these costs because - hey, the insurance companies will pay for it. They can absorb the co-pay so why should anyone fuss. Of course, may be some patients fell through the cracks and have to take other types of medications or go without but - those patients belong to the 99% anyway.

    (5) The Valeant's and Turing's argument that "anyone can compete because it's generic" is not exactly true. It's definitely NOT TRUE in the short term. In the middle or long term - sure, it's true that at these jacked up prices, generic manufacturers internationally will be wondering how these drugs can be delivered to American patients. What Valeant and Turing would want to do is the set the price point at a level which discouraged new generics from entering the market, while maximising profits and screw the patient till the point where he doesn't squeal too loudly such that the politicians need to take note. Turing, unfortunately, spoilt the game.

    (6) But of course, ultimately, ordinary Americans are paying for the higher priced medications - whether out of their own pocket or out of higher insurance premiums, with a resultant profit transfer to 1% to the employees of Valeant and the specialty pharmacies and 99% to the Pearsons and Ackmans of the company and the world. The patients themselves may think they are on a great deal - because it's the insurance company which picks up the tab - until the day arrives when the Patient has to pay for higher premiums out of his own pocket and they will.

    There is no such thing as a free lunch.

    Then solution isn't to get rid of the FDA. The solution is perhaps to re-work the approval processes in the FDA for re-testing generics so that high prices such as those set by Valeant and turing can be brought down rapidly and not in 4 years time.

    another solution Americans must consider is some form of single payer system. In Canada, Valeant isn't able to exploit the same loopholes and market inefficiencies. Nor in other countries. Only in the USA.

    The 1% in the healthcare system makes off with 99% of the profits.
     

  2. anonymous

    anonymous Guest

    Well said. Not completely accurate, but the gist of what you are saying is correct. Pearson and the Hedge Funds that supported him took advantage of the inefficiencies of the American Healthcare System to create a company and employ a business strategy to drive up the stock price way above where it should have been. They were all incentivized to drive the stock price up no matter what it took, whether that be price gouging, pharmacy shenanigans, financial engineering, you name it.....just a total piece of shit company all the way around.
     
  3. anonymous

    anonymous Guest

    Well said! Statements about "make a meaningful difference in patients' lives" and focus on patients" should be translated to "making the rich richer"
     
  4. anonymous

    anonymous Guest

    like i said before, stop with this. although I agree with you, banging off conspiracy theories makes you seem mentally ill. this is ever more evident considering you focus on obscure, useless details. someone could come out and point out the fact you focus on obscure and irrelevant details and you'd be discredited as a mentally ill conspiracy theorist. i hope you aren't, because you do seem to lack insight into what you post.
     
  5. anonymous

    anonymous Guest

    also you are the only one who uses bold in cafepharma posts. so you give yourself away quite easily. most of us are intelligent enough to use 5-10 proxies, change our diction in posts, etc etc etc

    I've lost faith in you, you sound like a paranoid fuck using this story for attention. Time for your meds? Stay the fuck out you useless shit
     
  6. anonymous

    anonymous Guest

    I think the original poster did a very nice job. To the last poster: You are quite wrong - you appear to be the serial poster that can be spotted a mile away with your bs comments ruining a perfectly meaningful thread.
     
  7. Guess what

    Guess what new user

    Joined:
    Nov 2, 2015
    Messages:
    13
    Likes Received:
    0
    hahaha! Thank you.
     
  8. +1

    Quite cogent analysis. There is a BEZZLE in American pharmacy/health. It is not just pharmacy - the entire healthcare system costs more. Spending 5mins digging around on http://www.compareyourcountry.org/health?cr=oecd&lg=en is instructive. The report from the International Federation of Health Plans (US contributors include Kaiser Permanente, BlueCross BlueShield, Aetna, others) is at http://www.ifhp.com/1404121/ and paging through the PDF will show you how expensive ALL of American healthcare is. American exceptionalism is alive and well in healthcare.

    The pgpf.org website has some simple graphs as well. If you think that number is OK, look at what it is in the rest of the world, and look at what salaries+wages are as a percentage of GDP. Your income as an earning part of the labor force is effectively salary + employer-contributed healthcare costs. If you drop healthcare costs to 12% of GDP (the rest of the GDP is at that level or below)


    Does that mean YOU (there - someone else used bold) are using 5-10 proxies, and changing your diction in posts in order to 'stuff the channel'? Hmmm...
     
  9. hey. your post was good one!!
     
  10. anonymous

    anonymous Guest

    Which post