Desperate Drug Companies Raising Prices On Drugs Still Under Patent

from the squeezing-every-last-cent dept

In recent weeks, we've discussed how drug companies are freaking out because they can't find anything new to patent, and their popular drugs are about to go off patent. Of course, as we've seen, having a monopoly lets them charge ridiculously high prices, and so the various drug companies (at least those who can't get the FDA to just hand them a new monopoly) are apparently dealing with the first issue by embracing the second one: they're ramping up prices on pretty much anything they still have under patent, with the largest increases being for those drugs that are closest to going off-patent.

Talk about a short-term strategy. Historically, it's been shown that when brand name drugs go off patent, they still command a significant premium in price over generic competitors. Yet, if the drug companies keep raising the prices higher and higher, it'll simply drive more people to seek out cheaper alternatives. If the drug companies actually priced the drugs reasonably, and recognized that they already had a strong branding lead (often on the backs of huge marketing campaigns), they'd realize they could keep a decent share of the market, even with somewhat higher prices. But simply trying to squeeze every last penny out of people while the drugs are still under patent seems like a strategy to completely give up once the drugs go off patent.

Filed Under: patents, pharmaceuticals, prices

Cornell Library Rejects Non-Disclosures On Journal Pricing; Will Reveal All Prices

from the go-big-red dept

One of the more pernicious areas of locking up knowledge that we've seen and discussed involves academic journals. These tend to involve private publishers who get a tremendous amount of completely free labor in terms of content submissions and even reviewers/editors... and then demand the copyrights of the research, while charging universities ridiculously high fees. Those publishers have also gone to great lengths to try to block the US government from trying to make federally funded research available to the public at no cost after a limited amount of time. And, of course, the journals often rely on secrecy to get the most money -- including requiring universities to sign non-disclosure agreements (NDAs) that forbid them from revealing how much they're paying for a journal.

It's nice to see some universities really starting to push back, and it's even nicer when it's a university that I attended and from which I received two degrees. My sister informs me that Cornell University has decided to take a stand and is refusing to sign any NDAs from various journals, and will make the prices they're being charged for such journals public. As the University made clear in a statement about this policy, it feels these agreements go against the basic nature of openness and fairness:

It has become apparent to the library community that the anticompetitive conduct engaged in by some publishing firms is in part a result of the inclusion of nondisclosure agreements in contracts. As Robert Darnton recently noted, by "keeping the terms secret, ... one library cannot negotiate for cheaper rates by citing an advantage obtained by another library." For this reason, the International Coalition of Library Consortia's "Statement of Current Perspective and Preferred Practices for the Selection and Purchase of Electronic Information" states that "Non-disclosure language should not be required for any licensing agreement, particularly language that would preclude library consortia from sharing pricing and other significant terms and conditions with other consortia." The more that libraries are able to communicate with one another about vendor offers, the better they are able to weigh the costs and benefits of any individual offer. An open market will result in better licensing terms.

Additionally, nondisclosure agreements conflict with the needs of CUL librarians and staff to work openly, collaboratively, and transparently. This conflict increases the likelihood that the terms of a nondisclosure agreement would be inadvertently violated, posing a threat to the university

The next step is focusing more and more on truly open journals and increasing their acceptance in academia.

Filed Under: journals, knowledge, learning, nda, openness, prices
Companies: cornell

Retroactive Drug Monopoly Raises Rates From $10... To $1,500

from the the-high-price-of-monopolies dept

A bunch of you have been sending in the somewhat horrifying story of how KV Pharmaceutical has been retroactively granted a monopoly on the drug Makena, which is use to prevent premature births. The product has been on the market for years, and normally costs about $10 per dose... but thanks to the new monopoly, the price is immediately jumping up to an astounding $1,500 per dose -- and this is something that many pregnant women need around 20 doses of during their pregnancy. That increases the overall price from about $200 to $30,000. For something that's been on the market for years. I'm reminded of Thomas Macaulay's famous statement:

"the effect of monopoly generally is to make articles scarce, to make them dear, and to make them bad."

Tragically, many obstetricians and the March of Dimes had vociferously supported this move, without understanding the basic economics of monopoly pricing. They thought that granting a monopoly to one company would mean that it would make the drug "more available." Joke's on them, and now they're upset:

"That's a huge increase for something that can't be costing them that much to make. For crying out loud, this is about making money," said Dr. Roger Snow, deputy medical director for Massachusetts' Medicaid program.

"I've never seen anything as outrageous as this," said Dr. Arnold Cohen, an obstetrician at Albert Einstein Medical Center in Philadelphia.

"I'm breathless," said Dr. Joanne Armstrong, the head of women's health for Aetna, the Hartford-based national health insurer.

Doctors say the price hike may deter low-income women from getting the drug, leading to more premature births. And it will certainly be a huge financial burden for health insurance companies and government programs that have been paying for it.

It's really amazing that people don't understand the basics of monopoly pricing and how drastically it has distorted the market for drugs. Hopefully this story of Makena will get some people to wake up as to why this is a massive problem.

Filed Under: drugs, economics, makena, monopolies, prices
Companies: kv pharmaceutical

The Artificially High Price Of Academic Journals And How It Impacts Everyone

from the sad-to-see dept

It's been a few years since we first discussed the ridiculous racket known as academic publishing. Unlike pretty much any other publication, all of the writing for these publications is done for free. Hell, in some subjects and for some journals, you actually have to pay to submit your papers. The "peer review" is all done for free and often any editing is done for free by an academic to build his or her reputation and CV. So, basically, you have just a tiny fraction of the costs of most any other publication, and yet, the mega-publishers behind these journals charge ridiculous amounts for subscriptions and even for single articles. Even worse, a significant percentage of academic research is still heavily funded by the US government (our taxpayer dollars), yet much of it is locked up behind these incredibly high prices. In many cases, the journals forbid the researcher from releasing the paper elsewhere (though many academics, thankfully, ignore this and offer up PDF downloads). NIH now requires research it funded to be publicly published a year after its published in a proprietary journal, and there are efforts to expand that to other government funding as well -- but the publishers have lobbied very hard against this, and even wish to repeal the NIH rule.

An article over at the Atlantic delves into this issue, going through the ridiculous economics showing how much lower the costs are for journals -- especially in this digital age -- and pointing out that this impacts everyone, rather than just doctors and scientists. The rest of the world shouldn't be cut off from research like this -- especially when it's federally funded. As John Bennett points out in response to that article, this is another example of intellectual monopolies making things ridiculously more expensive than the market should allow. As Thomas Macauley famously said a century and a half ago:

"the effect of monopoly generally is to make articles scarce, to make them dear, and to make them bad."

Filed Under: copyright, journals, knowledge, prices, research

Despite Promises That Franchise Reform Would Lower TV Rates, The Opposite Has Happened

from the so-much-for-that-theory dept

For years, the telcos pushed for cable franchise reform, which was sorely needed to some extent. Basically, for decades, various local municipalities would offer a "franchise" for cable TV providers, so that residents really only had a single choice. When I was growing up, if you wanted pay TV you had one option and one option only. The reason for this did make some sense at the time. Laying infrastructure for cable was disruptive and expensive, and towns didn't want multiple providers to dig up everyone's lawn or whatever. On top of that, with a single franchise managed by local government, that local government could put conditions on the franchise that helped local residents (for example, here in Silicon Valley some franchises required super high speed broadband connections between schools, government building and a few other facilities). However, with it also came the downsides of a monopoly.

In pushing for franchise reform, one of the key arguments made was that adding competition would lower prices -- which is not a ridiculous assumption at a high level. However, as Broadband Reports is now noting, that's not what's actually happening. It points out how AT&T, which benefited massively from said franchise reform, has continually raised the prices on U-Verse, and there's also been a similar corresponding increase in prices of cable TV, contrary to the promises.

All that said, I'm not ready to claim that franchise reform was a mistake. I agree that the claims of telco supporters appears to have been bunk, but that's to be expected. The real problem was that with basic franchise reform, we didn't get significant competition, but limited competition from companies who are still using regulatory capture to enable higher prices.

I think the real turning point on pay TV prices (contrary to the claims of some) won't come due to franchise reform, but as more people ditch pay TV altogether and cut that cord to go internet-only.

Filed Under: franchise reform, pay tv, prices, tv
Companies: at&t

Comcast Buying NBCU Will Lead To Higher Prices... But Is That Really A Bad Thing?

from the driving-folks-to-cut-the-cord dept

I've said from the beginning that I really don't understand all of the complaints about the Comcast/NBCU merger. It's the modern equivalent of AOL/Time Warner, which really only served to hasten people to move away from crappy old solutions. So, when I see a report claiming that the end result will mean higher prices for consumers as NBC jacks up its rates, I'm still not convinced this is a bad thing. As we've seen, there's a growing trend towards people cutting the cord on cable (even if the cable folks are in denial about this). Having prices shoot up even higher seems only likely to hasten the inevitable. You can't raise prices indefinitely if there's real competition -- and the problem is that the TV companies still don't believe (or simply don't realize) that there's increasing competition every day. If NBCU/Comcast really does lead to higher prices, it'll likely also lead to more subscribers realizing that there are alternatives as well.

Filed Under: cable, merger, prices, tv
Companies: comcast, nbc universal

Hollywood Seeks To Kill Off 3D Golden Goose With Much Higher Prices

from the oh-look,-bad-business-models,-now-in-3d dept

Ah, Hollywood. While the movie business has been doing quite well at the box office lately, many in the industry still haven't quite realized why. Obviously the rise of 3D flicks has given people a reason to actually leave the home and go to the theater -- in part because the experience is much better, and seeing movies in the theater is a social experience. Of course, now that 3D televisions are starting to come to market, there may start to be some more challenges there, and the way to deal with that is to improve the experience and make it even more worthwhile.

So what's Hollywood doing? They're just making it more expensive. Yes, they're jacking up the prices on 3D movies, in a typical short-term strategy. Rather than recognize how this might just drive more people to more seriously consider getting a 3D setup at home, Hollywood's simplistic business modeling seems to be "let's see how much we can squeeze out of people as quickly as possible." There is no recognition of the value of building up a longer term relationship and providing reasonable value at a reasonable price. And then they're going to complain about people not going to the movies, and blaming file sharing, rather than recognizing that they're driving willing customers away with much higher prices.

Filed Under: 3d, movies, prices

Too Little Too Late: Universal Music Finally Realizes That Maybe CDs Were Too Expensive

from the you're-about-a-decade-behind dept

David Herron alerts us to the news that it's finally occurred to the brain trust at Universal Music that, perhaps, CD prices were too high. They've introduced a "new pricing structure," which effectively means they've lowered the suggested retail prices on many CDs to between $6 and $10. Amusingly, the article quotes an anonymous person at a competitor who doesn't like this at all:

"Why does Universal feel the need to get below $10?"

Uh, perhaps because the market is shrinking because people find it too expensive otherwise. Either way, this move seems like way too little, way too late. Doing this in the late 90s might have been a start, but this isn't going to get people who have stopped buying CDs back into a plastic disc fix.

Filed Under: cds, prices
Companies: universal music

Oh No! Nobody Reads! Oh No! It's Too Cheap For Everyone To Read!

from the accessibility-is-a-good-thing dept

We recently wrote about how booksellers were freaking out over the "price war" between Amazon and Wal-Mart, whereby they're starting to offer certain books at a very cheap price to bring in more customers. The whole thing was a bit silly. Reader Robin Trehaeven alerts us to a fantastic opinion piece in the Library Journal by Barbara Fister, a librarian at Gustavus Adolphus College, in which she does a superb job mocking what she refers to as the "accessibility paradox" where those who are used to being gatekeepers to information at the same time as they're supposedly promoting the benefits of greater information, suddenly start whining when information really does get more accessible. This includes those booksellers:

I'm also taken aback by the horrified response of the book industry. I thought the big crisis was that nobody reads. Now it turns out the problem is that books are so popular with the masses they're being used as bait to draw in shoppers.

Come on, guys, get your story straight! Which is it?

But most of her brilliant sarcasm is directed at those in her own profession, who both work hard to get information for free, at the same time they complain about how the internet has made it so easy to route around librarians:

It strikes me that this issue is somewhat parallel to the love-hate relationship that many academic librarians have had with the Internet. Although our complicated relationship is improving, there are still some silly assumptions floating around. Oh no, our reference stats are down! Hurrah! People are able to find answers without our help. That's awesome! Anybody can publish on the web, unlike scholarly journals which are peer-reviewed. Fine, but don't tell me all peer-reviewed journal articles are shining examples of reason and academic brilliance. A lot of them are finely-sliced research rehashing the same findings, or are closely examined and exquisitely detailed trivia. Besides, there are plenty of examples of peer review failing in spectacular ways--and examples of wonderful peer-reviewed journals that were born free online.

But this is my favorite: Unlike information you find on the web, we pay for the information in our databases, and you get what you pay for. No, actually, with what you pay for you get a lot of junk that you don't even want, but you have no choice.

You want this journal? You have to subscribe to this pricey bundle. Either that, or you purchase one article at a time for your users, something more and more libraries are doing. You spend less, but the information never visits the library--it goes straight from the publisher to the desk of one user. All the library gets is the bill. Apart from failing on its merits, the argument that paid is better than free is self-contradicting. We can't tell students that purchased information is by definition better than free and, at the same time, beg faculty to recognize how broken the current system is and please, please, please make their work open access.

It's a great overall column, and nice to see a librarian lay the smackdown on hypocrisy within the bookselling and librarian worlds.

Filed Under: barbara fister, books, information, libraries, open access, prices, reading

Why Do Ebooks Cost So Much?

from the greed? dept

Jeff Malfant points us to a nice little rant over at News.com wondering why ebooks are so damned expensive. He points out that many seem to be priced at about the same going price as the physical books, despite no physical product to produce and ship. My guess is that companies and publishers think they can get away with it for now, since people are "used to" paying the price of books, but it won't last. It just becomes an opportunity for smarter folks to start offering cheaper books (or even free ebooks). And, at some point, a lot of people will just stop paying for the higher priced ebooks.

Filed Under: ebooks, prices