More Pharmaceutical Industry Price Gouging`

A recent New York Times article tells us that Lannett, a large generic drug maker, is echoing other companies I have written about in raising prices on its products by several hundred percent. Here's what Arthur Bedrosian, Lannett CEO, told a group of investors:

According to the investors, Mr. Bedrosian was asked if the price-hike business model in the drug industry was over. He chuckled and said no, adding that he had tripled the price of one of Lannett’s drugs that very morning. He did not identify which one, the investors said.

Mr. Bedrosian's "chuckle" may remind you of Donald Trump's cheerful boast about how he could grab women by the "pussy."

The market loves Lannett, which provides yet another example of market failure. In the future the market may ultimately punish Lannett the way it punished Valeant (see here and here) and Turing Pharmaceuticals, but by the time that happens patients will have been hurt and public and private payers will have been bilked of billions.

The NYT cites studies showing that when there are fewer than five competitors, our national theology of the wisdom of markets doesn't hold. That suggests a regulatory strategy that allows price regulation in the absence of adequate competition. Let's hope that Congress is prepared to act on the basis of protecting patients and the public from the kind of legal larceny the Mr. Bedrosian is chuckling about!