What an amusing allegation

A drug company that imposed huge increases in the price of medicines for British patients has filed for debt restructuring, raising fears over its financial health.

Concordia International, which was previously called AMCo, announced yesterday that it was beginning proceedings under Canadian law in an effort to reduce its debts by more than $2 billion. It follows a catastrophic fall in its share price that has resulted in its market value declining from about $1.5 billion to $30 million since The Times published an investigation into drug pricing in June last year.

The drug company was one of several businesses exposed by this newspaper for using a loophole in NHS pricing rules to increase the cost of medicines. The pharmaceutical companies were able to circumvent profit caps by dropping brand names and relaunching products as unbranded generics. The NHS relies on market competition to keep prices down in such cases but the drugs involved often had only a single supplier.

If it’s not able to make a profit then it’s not obvious that it is overcharging, is it?

14 comments on “What an amusing allegation

  1. Well it used to do it. Then they had to stop because they got found out. Then they collapsed.

    They could have been overcharging …..

    But the bottom line is that we do not have enough new drugs. Especially in things like antibiotics. If you throw enough money at the problem – despite stupid regulations – you can get some drugs at the end of it. Look at the progress being made against HIV. At long last. But most diseases do not have the political clout of ACT UP and so don’t get that sort of money thrown at them.

    Which means they are probably undercharging.

  2. The problem with developing new drugs isn’t so much the cost as the science. Or, to be blunt, the lack of good, new ideas on how to cure things. Bloody intricate, our bodies and brains.

    It’s worth reading Le Fanu on the Golden Age.

  3. Concordia’s business model is to buy up old drugs and put the price up. Several other companies have been doing the same thing, which has pushed up costs for all of them. In reaction to this strategy, drug buyers, including the NHS, have become more resistant to the price rises. And the FDA has speeded up generic drug approvals.

    So Concordia’s problem is that it assumed it would be able to overcharge for drugs, and it was wrong.

  4. Am thinking that overcharging to dumb buyers attracts higher share price which attracts lenders which enables payments to founders / senior mgt who don’t give a damn about investing in new drug research. Cause is self interest vs real respinsibility of all involved including the buyers

  5. dearieme – “Or, to be blunt, the lack of good, new ideas on how to cure things. … It’s worth reading Le Fanu on the Golden Age.”

    Le Fanu is, I think, an underappreciated classic. But why do we lack good ideas? If you look at his book, you can see most good ideas came from young people working on their own with little to no support from their institutions. Like most science in fact.

    So what do we do? We weigh down every researcher with a ton of paperwork and ethical clearance committees. All chaired by older skeptical colleagues. We give almost all research money to the nearly-retired who are set in their ways and unlikely to have any new ideas. We drive anyone with any independence or spark out of academia by more paper work and rampaging feminists who treat them as unconvicted sex offenders. We pay them so poorly it would make better sense for them to retrain as plumbers.

    It is amazing we get any new drugs at all.

  6. Its werid how people by SJW hate the companies that are the most regulated.

    Drug companies basically are parts of the hwalth depts take small companies with patents, buy them and drive them through the FDA (and international equivalents).

    Banks the same as are development companies.

    Maybe if we left to themselves things would be cheaper or there could be a rrade off.

    Drugs should be cheaper for older people necause the litigation risk is lower if your retire.

    Why can’t say 85 year olds simply have whatever pills they want. There are a million individual possibilities if people were free.

  7. It’s weird how people like Benaud imagine that every drug company is the same.

    Concordia does very little R&D. It’s a parasite on the drug market.

  8. @SMFS: I marvel that any bright, spirited people want an academic career nowadays. That’s another Golden Age that has closed.

    There’s an easy answer to the research grant problem. Assign a large proportion by lottery.

  9. I invest in distressed debt and have looked at a few of these companies.

    Others bought drugs, ramped the prices up over a few years, then sold the now super profitable drugs on. This company bought portfolios of those drugs, borrowing money to fund some of the purchase price. It was then pointed out that the historic price rises were ..questionable. If they cut prices then the super normal profits disappear, and ability to repay the debt disappears. No contradiction here.

    Of course the fact price on some old drugs rose by orders of magnitude and it took the NHS, etc years to wonder why is one of the scandals here.

  10. Per SJW: “Concordia does very little R&D. It’s a parasite on the drug market.”

    That’s one perspective. The alternative view is they provide drug developers with an early payback from the drugs they develop, freeing up capital for the developers to reinvest. Meanwhile Concordia make a return on their investment by managing the revenues from the drug over its lifetime, taking on a risk in doing so, but a risk which can be mitigated by buying a portfolio of drugs. So not a parasite any more than a property investment company is a parasite on the property development industry.

  11. I tout le Fanu’s book to all and sundry. One of the best books I’ve read in years. It’s amazing how often after you’ve read it that you see stories positing infectious agents as causes for some of the most refractory chronic diseases like Crohn’s, MS and even Type I diabetes.

  12. SMFS,

    “So what do we do? We weigh down every researcher with a ton of paperwork and ethical clearance committees. All chaired by older skeptical colleagues. We give almost all research money to the nearly-retired who are set in their ways and unlikely to have any new ideas. We drive anyone with any independence or spark out of academia by more paper work and rampaging feminists who treat them as unconvicted sex offenders. We pay them so poorly it would make better sense for them to retrain as plumbers.”

    How long is this going to last?

    I reckon that medicine and higher education are the two next big fields for massive disruption. I’m not talking about doctors and shiny healthcare tech companies companies doing more things in shiny tech companies with computers. Of course they will, but at a glacial pace. I mean things like OpenAPS where diabetics have built their own artificial pancreas. Sure, you can’t make them and sell them for anyone else, but what can you do that’s barely legal? Well, you can publish the specification. Maybe you can provide 3D printing instructions for parts. Maybe you tell people where to get those parts printed reliably. Could we get people doing AI diagnostic systems? Probably not in the UK, but we can find some country to host it or we open source it all over torrent sites. Could someone invent a drug for themselves and then build a machine to formulate it?

  13. You still need to get someone to install said pancreas. That’s not an amateur IT technician job.

    The single supplier trick ( (C) (R) (TM) Martin “crim” Shkreli*) only works with off-patent drugs that no one has bothered to generic (or everyone has given up), and for which the projected market is too small for anyone to bother. Add to that not making the product available for bioequivalence trials and you can pretty much checkmate any potential competitor. An unintended consequence of the regulators if ever there was one.

    Drug developers don’t need an “early payback”. Either they are big pharma and can market their own products and take their own risks, or they are little pharma, and have already sold up after Phase 2 at the latest. I’m working with one rare and brave little company running their own Phase 3 trial. If it works I will have a person-year’s worth of work to do and the company will get sold off. There will be no “early payback” needed as buyers will be queuing up to pay for the regulatory crap and then eat the company.

    These companies never have more than one product (that they are taking seriously anyway, there is sometimes a “portfolio” to make it look bigger) so they don’t need cashflow from one product to support development of another.

    *Yes, Tim, there are things you can do that are perfectly legal but still make you a first-order cunt of the Antient and Noble Order of Cuntery.

Leave a Reply

Name and email are required. Your email address will not be published.