The Much Bemoaned Market Has Solved the Daraprim “Problem”

The Much Bemoaned Market Has Solved the Daraprim “Problem”

The amount of dishonesty surrounding the story of Daraprim is not only staggering, it’s entertaining as hell.

Daraprim is a drug that treats certain kinds of infections, largely toxoplasmosis and malaria.  It’s a decades-old drug that even the manufacturer admits doesn’t work particularly well, but it’s one of very few drugs on the market that works at all so it’s the “standard” for treatment.  The dishonesty about the drug began when Martin Shkreli, an unlikable guy (to be very charitable) decided he wanted to corner the market on the drug and profit like crazy.  Immediately the uneducated ran to the internet to decry the “profiteering” and “price gouging” on this “AIDS” drug and “HIV” drug.

The ignorant critics immediately called for the government to seize the company, order the price lowered, and other nonsense.  Hillary Clinton even turned it (conveniently) into a campaign talking point, and used the opportunity to let loose with her “plan” to set a cap for monthly medication costs and other typical government nonsense responses.

The spin machine was in full effect.  Shkreli was beaten up publicly in a way that became a rallying cry for people who think no one should have to pay for health care.  Bernie Sanders and Hillary Clinton, the only real Democrat Presidential candidates, joined forces to slam Shkreli, and Sanders even took Shkreli’s donation (Shkreli is a Bernie fan) and gave it to an HIV charity (why not a malaria charity?  Oh, right, because Bernie was one of the people promoting the lie that Daraprim is an HIV drug).

When the candidates weren’t spinning, the media was.  Shkreli was referred to as “CE-Bro” and other derogatory things.  But then something really strange happened…  The insults turned into an attack on free markets, which many of us who believe in markets’ ability to solve things like this, found preposterous.

Often we were presented with a plethora of images of how cheap the drug was in Malaysia, or India, or the some other country.  The argument was that if we had single-payer, it would be cheaper because look how cheap it is everywhere else!  While that may be somewhat true, the reality is that the reason it is so cheap elsewhere are two-fold: demand (more people need it, with maybe the exception of the UK), and the US is paying more for it by default.  The costs don’t go down for the drug, the price does.  If you don’t know the difference, you have no business talking about markets in the first place.

Just because the end consumer price is lower doesn’t mean the drug is cheaper, it just means that they’re insulated from the cost.  To put this in terms that every good single-payer advocate can understand: US health care doesn’t get cheaper when Medicare pays the bill, it’s just that the end user is insulated from that cost as government redistributes portions of their income to cover the difference.  The same happens in education.  No one has any idea what tuition is any more because nearly everyone has a student loan to pay for it.  After college, at the first signs of how much needs to be repaid, it sinks in that things can be expensive even when you aren’t seeing the costs.

The calls for increased regulation and price controls are the perfect response from the market-ignorant, but then the typical response of “The market broke this” start and the market is blamed for what the government created.  As is always the case when something gets out of wack, “unrestrained markets” and “unfettered capitalism” are blamed when there isn’t one single example of any market of any kind in the United States that has an unfettered market, and even more so in the case of pharmaceuticals.

Even though Turing had many programs available for people who (legitimately) couldn’t afford Daraprim (not just those who didn’t “want” to pay the price for it) Shkreli was held up as how evil the market was and how broken it was.

Here’s the thing: the market not only isn’t broken, it, in spite of government, has fixed the problem.

Imprimis Pharmaceuticals is about to break Turing’s market conclusively by offering a competing drug for $1 a pill.  For those keeping score, that’s $0.33 more a tablet than the oft-referred to UK National Health Service.  Not bad, and it wasn’t government force that created Imprimis, although that seems to be another thing that the lefties are getting wrong today.

A11207283_10156144460775035_3457582172325000550_nfter Imprimis made their announcement, the immediate response from the uneducated was that Imprimis was entering the same market that Turing (Shkreli’s company) and that any barriers Turing spoke about that kept prices in general high were nonsense.  The problem, of course, is that they’re wrong.  Unsurprisingly.

Imprimis isn’t entering Turing’s market, they’re just producing a competitive drug, but they’re not doing it the same way.  Imprimis isn’t a traditional pharmaceutical company in the same sense Turing is.  The kind of company they are often gets used passingly in stories about the company, but it’s important.

Imprimis is a compounding pharmaceutical company.  They’re not allowed to make direct generic versions of existing drugs, but they are allowed to use existing drugs from other companies and alter them in ways that make them safe for people with, for example, allergies.  Business Insider wrote an excellent article about Imprimis that actually explains the difference in the companies.

Compounding pharmacies are different from major drug companies, which focus on developing new drugs for the US Food and Drug Administration approval. Even generic manufacturers still have to get FDA approval for the drugs they plan to market.

Instead, compounding pharmacies buy FDA-approved compounds that they can then formulate into pills that can be customized to fit certain conditions.

For example, if a drug you need is only available in pill form and you have trouble swallowing pills, a compounding pharmacy can buy that pill and put it into a liquid form that’s easier to take. The only thing they can’t do is directly copy the FDA-approved drug.

That’s what Imprimis plans to do with pyrimethamine, the compound in Daraprim. The company will combine pyrimethamine with leucovorin, a form of B-vitamin folic acid that’s recommended to treat toxoplasmosis by the US Centers for Disease Control and Prevention. The leucovorin counters the bone marrow loss that comes as a side effect of taking pyrimethamine.

So not only is the drug going to be cheaper, it’ll probably be better for the health of the person taking it.  As Shkreli said on many occasions, Daraprim isn’t even a great drug which is why Turing was developing a replacement for it.

It’s important to note that in this case, government exacerbated the problem rather than solving it.  Because of the silly maze of FDA regulations, regular pharma companies cannot make a profit at $1 a pill, but Imprimis can.

Imprimis said it now offers customizable compounded formulations of pyrimethamine and leucovorin in in capsules for as low as $99 for a bottle of 100 capsules. For more information, visit http://www.imprimiscares.com.

There’s a limitation, Baum said: The formulation is not FDA-approved, and can legally only be sold through a doctor’s prescription to a specific individual. The specific ingredients are FDA-approved, Baum said, and its compounding operations are FDA-inspected.

Filing for FDA approval of the compound itself would take years and millions of dollars, Baum said. By not filing, Imprimis can keep prices down and make a significant profit, even for less than $1 a capsule, Baum said in a Thursday interview.

The company has formed a division called Imprimis Cares to make special formulations including such high-priced generic drugs, he said. The division serves all 50 states, he said, and many more drugs are forthcoming.

Imprimis will be offering more of these types of drugs, none of which will have the FDA’s blessing, and doctors will have to prescribe their version directly.  The market is responding in a way that avoids the perils and pitfalls of drug regulations.  We’ve seen this before on numerous occasions where FDA regulations have kept terminal patients from trying experimental drugs, telling dying patients that the drugs that may save their lives are off-limits because they haven’t gotten government blessings and even at its best, the right of a dying patient to pursue a treatment that might save them is still heavily limited by government.

Government is actually a death sentence, not hope.

It’s fun watching people who don’t understand this story at all talk about it because of the sheer volume of things they get wrong.  They blame the free market for the price hike, then credit the government with the new drug.  It’s hard to expect honesty, though, when you consider that most people still refer to this drug as an “AIDS” drug or an “HIV” drug in an effort to garner sympathy and rile up the pitchfork and torches crowd.

I should note that I don’t like what Shkreli did.  I don’t condone jacking up the price on something that’s important to the survival of other people.  That being said, I’m even more opposed to putting a gun to someone’s head and ordering them to charge a certain price for their product.  I’d much rather a voluntary non-violent and non-coercive solution and, with no thanks to the FDA, we now seem to have one on the way.  In the end, it will be even better for the patient than the original.  It’s a healthier and cheaper (even than the original price before the price hike) alternative and not one law was needed to get it done.

On top of that, Turing will now take a big hit and probably lose thousands of customers as the cheaper formulation hits the market.  The company will be punished for their behavior without a single court order, jail sentence, or government fine imposed.

That’s how the free market works when you let it.

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