The Strange Case of Off-Patent Drug Price Gougers; Bloomberg, 9/9/16

Justin Fox, Bloomberg; The Strange Case of Off-Patent Drug Price Gougers:

"There’s a conflict at the heart of pharmaceutical pricing in the U.S.: On the one hand, it’s in the public’s interest for pharma companies to get a good return on the huge investments they often make in developing new drugs. On the other, it’s in the public’s interest to be able to afford those drugs.

We try to resolve this by granting companies temporary monopolies (aka patents) on the drugs they develop -- letting them effectively set the price unilaterally -- but then allowing competition from generic substitutes once the patents expire...

What’s going on, basically, is that a new breed of pharmaceutical company has emerged (Valeant is, or at least was, the archetype) that doesn’t develop drugs but identifies business opportunities in existing drugs --many of them with expired patents -- that the previous owners were too lazy or timid or decent to fully exploit. So they acquire them, and jack up the prices."