4 Pharma CEOs Admit They Jack Up Drug Prices for the Hell of It | BNET

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http://m.bnet.com/blog/drug-business/4-pharma-ceos-admit-they-jack-up-drug-price\

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Placebo Effect

4 Pharma CEOs Admit They Jack Up Drug Prices for the Hell of It

By Jim  | May 17, 2011

Four healthcare CEOs did something extraordinary at the Reuters Health Summit

last week: They admitted that drug companies put up prices just for the hell of

it. It was a rare moment of group candor from Big Pharma and its allies, who

usually argue that prices are set by the market or that companies need high

prices to pay for innovative R & D.

Prices in the drug business only ever seem to go up, making healthcare in the

U.S. among the most expensive in the world. About 60 percent of bankruptcies in

the U.S. are linked to medical bills. Although an increasing number of medicines

are going off-patent to become cheap generics, bringing some prices down, that

alone does not subject the remaining on-patent drugs to the kind of price

competition you’d want to see in a healthy, free market.

The only “free†thing about drug marketing right now is CEOs’ freedom

to raise prices whenever they want. Shire (SHPGY) CEO Angus said:

“Prices were just shoved up every year to make more money and meet earnings,

to be blunt,†Shire (SHP.L) Chief Executive Angus said.

He was referring to so-called mass market drugs used to treat common conditions

like high blood pressure, rather than the specialty products for rare genetic

diseases that are Shire’s hallmark.

He could have been referring to his own drugs, too. A Shire spokesperson told

BNET just three days before spoke that it put up the price of Adderall

XR to take advantage of a shortage of the drug in some markets. Previously,

Shire jacked up the price of Adderall to force patients to switch to its other

branded drug, Vyvanse. The hope was that patients and doctors would not switch

back to generic Adderall when it arrived.

No transparency

AstraZeneca (AZN) CEO Brennan agreed with :

“We really don’t have good transparency on pricing in the United States

market,†said AstraZeneca CEO Brennan, while noting that it is one of

the few markets where companies can freely raise prices.

The main reason companies can raise prices freely in America is not because

Europe and the East are riddled with price-control regulations. It’s largely

because federal law in the U.S. prevents the government from negotiating with

drug companies over the price of drugs. If a drug is approved by the FDA,

Medicare and Medicaid — i.e. the taxpayer — have to pay for it, according to

an oft-manipulated pricing formula. A simple cost-free reform to this law — to

allow Medicare and Medicaid to bargain with drug suppliers the same way

insurance companies do — would shave billions off national healthcare costs

and force drug companies to start competing with each other on price as well as

safety and efficacy.

GlaxoKline (GSK) CEO Witty claimed everyone else was raising

prices, but not him:

“We have observed some really high price increases being taken by other

companies in the U.S. … which I just find absolutely incredible,â€

GlaxoKline (GSK.L) CEO Witty said on a recent conference call.

“We think it is probably not the right moment for people to be taking crazy

price increases. We think ultimately that is going to come back to bite.â€

CEO, heal thyself

GSK has seen declines on some products sold in European countries where their

governments have got pricing leverage over companies. But his Q1 2011 earnings

statement says on page 4 that GSK still managed to offset declining sales of its

asthma blockbuster Advair by raising its price.

And Snow, the troubled CEO of pharmacy benefit manager Medco Health

Solutions (MHS), complained about the same thing:

“As their branded drugs approach the patent cliff, there has always been the

tendency to see increased pricing toward the end, just to get the last dollar

out of every drug before they lose brand protection,†said Snow, chief

executive officer at Medco Health Solutions (MHS.N), one of the nation’s

largest managers of prescription drug benefits.

Snow argued that prices were going up to pay for the $80 billion excise tax the

industry agreed to pay in order to pass President Obama’s healthcare reform.

Sure, those fees add to the cost of drugs. But none of these CEOs will ever dare

publish how many extra drug sales they made due to increased health coverage for

previously uninsured Americans.

Besides, Medco isn’t helping keep costs down for employees in the California

Public Employees’ Retirement System. It once allegedly paid a “consultantâ€

$4 million in order to get a $48 million contract managing pharmacy benefits for

CalPERS. (In other words, it could have fulfilled the contract for just $44

million.) Medco isn’t a charity. Every “consulting†fee it pays must be

extracted from patients at some point in order to stay in business.

So, brownie points for honesty, fellas, but zero points for action.

Sent via BlackBerry by AT & T

[Guest guest]

http://m.bnet.com/blog/drug-business/4-pharma-ceos-admit-they-jack-up-drug-price\

s-for-the-hell-of-it/8378

Placebo Effect

4 Pharma CEOs Admit They Jack Up Drug Prices for the Hell of It

By Jim  | May 17, 2011

Four healthcare CEOs did something extraordinary at the Reuters Health Summit

last week: They admitted that drug companies put up prices just for the hell of

it. It was a rare moment of group candor from Big Pharma and its allies, who

usually argue that prices are set by the market or that companies need high

prices to pay for innovative R & D.

Prices in the drug business only ever seem to go up, making healthcare in the

U.S. among the most expensive in the world. About 60 percent of bankruptcies in

the U.S. are linked to medical bills. Although an increasing number of medicines

are going off-patent to become cheap generics, bringing some prices down, that

alone does not subject the remaining on-patent drugs to the kind of price

competition you’d want to see in a healthy, free market.

The only “free†thing about drug marketing right now is CEOs’ freedom

to raise prices whenever they want. Shire (SHPGY) CEO Angus said:

“Prices were just shoved up every year to make more money and meet earnings,

to be blunt,†Shire (SHP.L) Chief Executive Angus said.

He was referring to so-called mass market drugs used to treat common conditions

like high blood pressure, rather than the specialty products for rare genetic

diseases that are Shire’s hallmark.

He could have been referring to his own drugs, too. A Shire spokesperson told

BNET just three days before spoke that it put up the price of Adderall

XR to take advantage of a shortage of the drug in some markets. Previously,

Shire jacked up the price of Adderall to force patients to switch to its other

branded drug, Vyvanse. The hope was that patients and doctors would not switch

back to generic Adderall when it arrived.

No transparency

AstraZeneca (AZN) CEO Brennan agreed with :

“We really don’t have good transparency on pricing in the United States

market,†said AstraZeneca CEO Brennan, while noting that it is one of

the few markets where companies can freely raise prices.

The main reason companies can raise prices freely in America is not because

Europe and the East are riddled with price-control regulations. It’s largely

because federal law in the U.S. prevents the government from negotiating with

drug companies over the price of drugs. If a drug is approved by the FDA,

Medicare and Medicaid — i.e. the taxpayer — have to pay for it, according to

an oft-manipulated pricing formula. A simple cost-free reform to this law — to

allow Medicare and Medicaid to bargain with drug suppliers the same way

insurance companies do — would shave billions off national healthcare costs

and force drug companies to start competing with each other on price as well as

safety and efficacy.

GlaxoKline (GSK) CEO Witty claimed everyone else was raising

prices, but not him:

“We have observed some really high price increases being taken by other

companies in the U.S. … which I just find absolutely incredible,â€

GlaxoKline (GSK.L) CEO Witty said on a recent conference call.

“We think it is probably not the right moment for people to be taking crazy

price increases. We think ultimately that is going to come back to bite.â€

CEO, heal thyself

GSK has seen declines on some products sold in European countries where their

governments have got pricing leverage over companies. But his Q1 2011 earnings

statement says on page 4 that GSK still managed to offset declining sales of its

asthma blockbuster Advair by raising its price.

And Snow, the troubled CEO of pharmacy benefit manager Medco Health

Solutions (MHS), complained about the same thing:

“As their branded drugs approach the patent cliff, there has always been the

tendency to see increased pricing toward the end, just to get the last dollar

out of every drug before they lose brand protection,†said Snow, chief

executive officer at Medco Health Solutions (MHS.N), one of the nation’s

largest managers of prescription drug benefits.

Snow argued that prices were going up to pay for the $80 billion excise tax the

industry agreed to pay in order to pass President Obama’s healthcare reform.

Sure, those fees add to the cost of drugs. But none of these CEOs will ever dare

publish how many extra drug sales they made due to increased health coverage for

previously uninsured Americans.

Besides, Medco isn’t helping keep costs down for employees in the California

Public Employees’ Retirement System. It once allegedly paid a “consultantâ€

$4 million in order to get a $48 million contract managing pharmacy benefits for

CalPERS. (In other words, it could have fulfilled the contract for just $44

million.) Medco isn’t a charity. Every “consulting†fee it pays must be

extracted from patients at some point in order to stay in business.

So, brownie points for honesty, fellas, but zero points for action.

Sent via BlackBerry by AT & T

[Guest guest]

http://m.bnet.com/blog/drug-business/4-pharma-ceos-admit-they-jack-up-drug-price\

s-for-the-hell-of-it/8378

Placebo Effect

4 Pharma CEOs Admit They Jack Up Drug Prices for the Hell of It

By Jim  | May 17, 2011

Four healthcare CEOs did something extraordinary at the Reuters Health Summit

last week: They admitted that drug companies put up prices just for the hell of

it. It was a rare moment of group candor from Big Pharma and its allies, who

usually argue that prices are set by the market or that companies need high

prices to pay for innovative R & D.

Prices in the drug business only ever seem to go up, making healthcare in the

U.S. among the most expensive in the world. About 60 percent of bankruptcies in

the U.S. are linked to medical bills. Although an increasing number of medicines

are going off-patent to become cheap generics, bringing some prices down, that

alone does not subject the remaining on-patent drugs to the kind of price

competition you’d want to see in a healthy, free market.

The only “free†thing about drug marketing right now is CEOs’ freedom

to raise prices whenever they want. Shire (SHPGY) CEO Angus said:

“Prices were just shoved up every year to make more money and meet earnings,

to be blunt,†Shire (SHP.L) Chief Executive Angus said.

He was referring to so-called mass market drugs used to treat common conditions

like high blood pressure, rather than the specialty products for rare genetic

diseases that are Shire’s hallmark.

He could have been referring to his own drugs, too. A Shire spokesperson told

BNET just three days before spoke that it put up the price of Adderall

XR to take advantage of a shortage of the drug in some markets. Previously,

Shire jacked up the price of Adderall to force patients to switch to its other

branded drug, Vyvanse. The hope was that patients and doctors would not switch

back to generic Adderall when it arrived.

No transparency

AstraZeneca (AZN) CEO Brennan agreed with :

“We really don’t have good transparency on pricing in the United States

market,†said AstraZeneca CEO Brennan, while noting that it is one of

the few markets where companies can freely raise prices.

The main reason companies can raise prices freely in America is not because

Europe and the East are riddled with price-control regulations. It’s largely

because federal law in the U.S. prevents the government from negotiating with

drug companies over the price of drugs. If a drug is approved by the FDA,

Medicare and Medicaid — i.e. the taxpayer — have to pay for it, according to

an oft-manipulated pricing formula. A simple cost-free reform to this law — to

allow Medicare and Medicaid to bargain with drug suppliers the same way

insurance companies do — would shave billions off national healthcare costs

and force drug companies to start competing with each other on price as well as

safety and efficacy.

GlaxoKline (GSK) CEO Witty claimed everyone else was raising

prices, but not him:

“We have observed some really high price increases being taken by other

companies in the U.S. … which I just find absolutely incredible,â€

GlaxoKline (GSK.L) CEO Witty said on a recent conference call.

“We think it is probably not the right moment for people to be taking crazy

price increases. We think ultimately that is going to come back to bite.â€

CEO, heal thyself

GSK has seen declines on some products sold in European countries where their

governments have got pricing leverage over companies. But his Q1 2011 earnings

statement says on page 4 that GSK still managed to offset declining sales of its

asthma blockbuster Advair by raising its price.

And Snow, the troubled CEO of pharmacy benefit manager Medco Health

Solutions (MHS), complained about the same thing:

“As their branded drugs approach the patent cliff, there has always been the

tendency to see increased pricing toward the end, just to get the last dollar

out of every drug before they lose brand protection,†said Snow, chief

executive officer at Medco Health Solutions (MHS.N), one of the nation’s

largest managers of prescription drug benefits.

Snow argued that prices were going up to pay for the $80 billion excise tax the

industry agreed to pay in order to pass President Obama’s healthcare reform.

Sure, those fees add to the cost of drugs. But none of these CEOs will ever dare

publish how many extra drug sales they made due to increased health coverage for

previously uninsured Americans.

Besides, Medco isn’t helping keep costs down for employees in the California

Public Employees’ Retirement System. It once allegedly paid a “consultantâ€

$4 million in order to get a $48 million contract managing pharmacy benefits for

CalPERS. (In other words, it could have fulfilled the contract for just $44

million.) Medco isn’t a charity. Every “consulting†fee it pays must be

extracted from patients at some point in order to stay in business.

So, brownie points for honesty, fellas, but zero points for action.

Sent via BlackBerry by AT & T

[Guest guest]

http://m.bnet.com/blog/drug-business/4-pharma-ceos-admit-they-jack-up-drug-price\

s-for-the-hell-of-it/8378

Placebo Effect

4 Pharma CEOs Admit They Jack Up Drug Prices for the Hell of It

By Jim  | May 17, 2011

Four healthcare CEOs did something extraordinary at the Reuters Health Summit

last week: They admitted that drug companies put up prices just for the hell of

it. It was a rare moment of group candor from Big Pharma and its allies, who

usually argue that prices are set by the market or that companies need high

prices to pay for innovative R & D.

Prices in the drug business only ever seem to go up, making healthcare in the

U.S. among the most expensive in the world. About 60 percent of bankruptcies in

the U.S. are linked to medical bills. Although an increasing number of medicines

are going off-patent to become cheap generics, bringing some prices down, that

alone does not subject the remaining on-patent drugs to the kind of price

competition you’d want to see in a healthy, free market.

The only “free†thing about drug marketing right now is CEOs’ freedom

to raise prices whenever they want. Shire (SHPGY) CEO Angus said:

“Prices were just shoved up every year to make more money and meet earnings,

to be blunt,†Shire (SHP.L) Chief Executive Angus said.

He was referring to so-called mass market drugs used to treat common conditions

like high blood pressure, rather than the specialty products for rare genetic

diseases that are Shire’s hallmark.

He could have been referring to his own drugs, too. A Shire spokesperson told

BNET just three days before spoke that it put up the price of Adderall

XR to take advantage of a shortage of the drug in some markets. Previously,

Shire jacked up the price of Adderall to force patients to switch to its other

branded drug, Vyvanse. The hope was that patients and doctors would not switch

back to generic Adderall when it arrived.

No transparency

AstraZeneca (AZN) CEO Brennan agreed with :

“We really don’t have good transparency on pricing in the United States

market,†said AstraZeneca CEO Brennan, while noting that it is one of

the few markets where companies can freely raise prices.

The main reason companies can raise prices freely in America is not because

Europe and the East are riddled with price-control regulations. It’s largely

because federal law in the U.S. prevents the government from negotiating with

drug companies over the price of drugs. If a drug is approved by the FDA,

Medicare and Medicaid — i.e. the taxpayer — have to pay for it, according to

an oft-manipulated pricing formula. A simple cost-free reform to this law — to

allow Medicare and Medicaid to bargain with drug suppliers the same way

insurance companies do — would shave billions off national healthcare costs

and force drug companies to start competing with each other on price as well as

safety and efficacy.

GlaxoKline (GSK) CEO Witty claimed everyone else was raising

prices, but not him:

“We have observed some really high price increases being taken by other

companies in the U.S. … which I just find absolutely incredible,â€

GlaxoKline (GSK.L) CEO Witty said on a recent conference call.

“We think it is probably not the right moment for people to be taking crazy

price increases. We think ultimately that is going to come back to bite.â€

CEO, heal thyself

GSK has seen declines on some products sold in European countries where their

governments have got pricing leverage over companies. But his Q1 2011 earnings

statement says on page 4 that GSK still managed to offset declining sales of its

asthma blockbuster Advair by raising its price.

And Snow, the troubled CEO of pharmacy benefit manager Medco Health

Solutions (MHS), complained about the same thing:

“As their branded drugs approach the patent cliff, there has always been the

tendency to see increased pricing toward the end, just to get the last dollar

out of every drug before they lose brand protection,†said Snow, chief

executive officer at Medco Health Solutions (MHS.N), one of the nation’s

largest managers of prescription drug benefits.

Snow argued that prices were going up to pay for the $80 billion excise tax the

industry agreed to pay in order to pass President Obama’s healthcare reform.

Sure, those fees add to the cost of drugs. But none of these CEOs will ever dare

publish how many extra drug sales they made due to increased health coverage for

previously uninsured Americans.

Besides, Medco isn’t helping keep costs down for employees in the California

Public Employees’ Retirement System. It once allegedly paid a “consultantâ€

$4 million in order to get a $48 million contract managing pharmacy benefits for

CalPERS. (In other words, it could have fulfilled the contract for just $44

million.) Medco isn’t a charity. Every “consulting†fee it pays must be

extracted from patients at some point in order to stay in business.

So, brownie points for honesty, fellas, but zero points for action.

Sent via BlackBerry by AT & T