Pharmaceutical companies shooting themselves in the foot as they simply follow capitalistic incentives

$10 drug now $1500 after FDA grants monopoly
[Via Boing Boing]

A progesterone hormone injection, used to prevent preterm labor, used to be $10 a shot. Now that the FDA has assigned an exclusive right to create the easily-made formula to one company, KV Pharmaceuticals, the price has risen to $1500. Almost all of it is pure profit, and KV Pharma did not develop the drug or pay for its trials: the taxpayer did, via the National Institute for Health. It is said to be the only drug proven to prevent pre-term birth, and an expert cited by ABC News suggests that the profession was snookered into supporting the assignment as a quality standardization measure.


There is nothing evil with the business model here – get access to a critical product and then run the price up to what the market will bear. Insurance companies have the choice to simply not pay for it – thus becoming real monsters who will be responsible for the death of infants – or pay the extra $20-30 million a year. Which eventually comes from our pockets.

Just like with colchicine – which saw a kick up  from pennies a tablet to $5 a tablet – this really serves to demonstrate the greed of pharmaceutical companies, which is good if you are a share-holder and bad if you ever get sick.

This is where the drug companies are fighting a losing battle.  In a free market, commodities get priced pretty fairly especially since there are alternatives. But drugs offer none of this efficiency, allowing the corporation to charge huge amounts for something it did a small amount to develop.

When it comes to our health, there really is little choice and the profit-motive means that we will have to pay outlandish prices with huge markups on things that were mostly developed by tax-payer money to begin with.

No amount of fiddling with healthcare reform will work until this sort of thing is dealt with. All of a sudden, $20-30 million a year has to be raised for just 1 drug that would not have been needed a year ago.

Thus do Big Pharma become perceived as evil. Increasing their profits by taking advantage of loopholes while shifting the burden to all of us. All the explanation in the world about research and development costs – which to a large extent are true –  go out the window when the price of a drug skyrockets 200-fold in a year simply because a company can.