“Health is Priceless:”
A recent article in the New York Times stated that pharmaceutical companies are employing a new rationale to justify the seemingly irrationally, exorbitant prices being charged for pharmaceuticals: “Health is priceless.” While true, many people afflicted with dire conditions live under profound financial constraints…and thus cannot afford “priceless” drugs.
It’s All About Returns:
The article then goes on to quote Steve, Francesco, a pharmaceutical consultant, as stating: “To understand drug pricing you have to shed your sense of value as a consumer and as a noble human being. You have to put on the lens of the health care industry, where what you’re doing is looking for opportunities to maximize return.”
Gilead: A Poster Child for Profiteering:
Mr. Francesco is dead on the money: The level of returns are obvious…raising the price of some pharmaceutical stocks to stratospheric levels. Gilead Science is a poster-child for profiting from arguably exorbitant drug pricing. According to the most recent edition of Barron’s (4/28/14), “On Tuesday, the biotechnology giant reported a profit of $2.2 billion, tripling its profit of a year ago. That’s thanks to the runaway success of its hepatitis C drug Sovaldi, which had sales of $2.3 billion during the first quarter, making it one of the most successful drug launches ever.”
Up and up it goes, where it stops nobody knows. If you own the stock, perhaps you should hold-on, for Barron’s states that “Analysts expect Gilead to earn $10.1 billion in 2014, up from $3.1 billion last year…” And Gilead is not the outlier – they are rapidly becoming the norm in a pharmaceutical industry unfettered by any type of logic, ethic, or regulation relative to pricing.
Sarepta Poised to Profit:
Sarepta Therapeutics is yet another example. The FDA has put their drug, Eteplirsen, for treating Duchenne muscular dystrophy on the fast track for review and approval. According to another article in Barron’s (4/24/14), “Baird analyst Brian Skorney, who lifted his price target to $53 from $35, wrote that the situation is “commercially ideal” because “the patient population is readily identified, the unmet medical need is high, the treatment is likely to be lifelong, and the market will be insensitive to price. Eteplirsen could cost up to $500,000 a year per patient.”
Life is precious…the market is insensitive to price…and pharmaceutical companies are capitalizing on these facts at level never before seen in history!
A Sad Commentary on our Values:
While I thank god for the medical breakthroughs we are experiencing today, I feel great reproach for the executives within pharma who are profiteering in such a shameless manner. Is the only way to win in this game is by owning their stocks? I hope not.