A handful of pharmaceutical companies have been in the crosshairs over the last six months or so, both for the price of their products and for their practices.
One of the most notorious recently is Canadian company, Valeant Pharmaceuticals, which is expected to announce fourth-quarter earnings this morning.
In that time, we’ve learned in the last few months is that a handful of drug makers are aggressive — some say reckless — in how they make money.
Rather than develop their own drugs, Valeant bought up other drug makers who had near monopolies on certain medications, said University of Michigan’s Erik Gordon. “It targeted companies that had drugs whose prices Valeant believed it could raise several times over,” he said. “They referred to it as ‘mispriced products,’ but what they meant was products whose prices they could jack up.”
Last year, Valeant bought two heart medications, and the same day the list prices went up 525 percent and 212 percent.
It’s seen as a niche strategy in the pharmaceutical industry. Express Scripts Dr. Glen Stettin said that strategy’s days may be numbered. “We’ve sent a message to anybody who is thinking about this is going to be a good business practice in the future, they should think twice,” he said.
Stettin said his company — which manages prescription drugs for companies and insurers — makes it harder to get these medications. Roadblocks like this may explain why Valeant says it’s ditching this business model.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.