Simone Wapler – La Chronique Agora (France) –
The European Commission is investigating the prices charged by the South African laboratory Aspen Pharmacare, suspected of abuse of a dominant position in five anti-cancer treatments, in particular against blood cancers.
For the time being, it can not be said that the news has caused the collapse of the value of this pharma company listed on the Johannesburg Stock Exchange.
In developed countries, the financing of health care now relies heavily on public money and not on a private insurance system.
In this context, many good souls with noble sentiments find no objection to public interference and price control. Life and health are priceless.
From then on, the “pharma” became emblematic of crony capitalism: a disreputable crossroads where lobbyists, eager politicians, servile legislators, zealous bureaucrats, subsidy-seeking industrialists, bonuses and favors, and purveyors of public funds met.
It is a sector in which the particular investor will venture at his own risk. How to assess the future margins of a laboratory? What is thejustPrice of a drug?
That said, some are doing very well to transform this crony capitalism into opportunities. This is the case of my colleague in the serviceFDA Biotech Trader. He speculates on the timing of the US Food & Drug Administration, the bureaucratic body that decides on marketing authorizations: prices soar … and profits with – 224%, 122%, 287% … subscribers of our specialist Ray Blanco chain the capital gains. To join them,click here
In the case of France, it is up to the Economic Committee for Health Products to negotiate prices with laboratories to reduce patient bills.
At the end of March, the Californian laboratory Gilead agreed to commercialize Sovaldi, its advanced treatment against hepatitis C, for 28,700 € instead of the 56,000 € requested in 2013. Solvadi cures this viral infection in three months. The origin of cirrhosis and liver cancers.
A victory of the welfare state and its zealous officials over the harshness of Gilead’s gain? Not really…
In fact, it was competition that did the job, including Merck’s entry into the market.
But if the state is involved in everything, with less prospects for profitability, will research on rare or orphan diseases not be abandoned?
according toThe Express, The average rate of return of pharma is very (too?) Comfortable:
“[It] exceeds 20%, compared with 8% in other sectors, according to the Economic, Social and Environmental Council. “These profits are essential to attract the capital that will finance the investments of tomorrow,” defends Patrick Errard, president of LEEM, the association of pharmaceutical companies. Yet it is not certain that the cost of research and development is progressing as fast as the price of molecules. “
We do not pretend toThe ChronicleHave ready-made solutions, but we have two certainties.
In the first place, government-controlled and controlled prices prove to be long-termalwaysa disaster. To our knowledge, there is no example of price control which generates innovative and efficient sectors of activity. It’s the contrary.
Second, removing competition favors waste and nonsense.
In France, health insurance is compulsory, nationalized, with contributions proportional to income and a strange notion of “entitlement”. The elimination of the competition effect, the apparent gratuitousness, provokes irresponsible behavior.
Thus, the French all have a holiday or car budget but fiercely reject the idea of having a health budget with a franchise “minor risk” covering bobology.
As usual, “regulation” has generated its own problemsUp MagazineDescribes us as follows:
“The question of adapting price regulation and pricing mechanisms to innovative medicines is thus raised. The current system was developed when innovations were relatively rare and was not designed to adapt to the conditions under which innovative medicines are now on the market.Regulatory mechanisms do not sufficiently differentiate breakthrough innovations from incremental innovations(Improving treatment without process change), and the price does not really reflect the innovative character of the treatment.”
But, as usual, the journalist thinks that more of what has not worked will be the solution.
“In general, the regulatory system lacks a vision and overall control.
A greater emphasis should be given to medico-economic evaluation, which compares the expected results of a health intervention with the resources used to produce it. The prices demanded by manufacturers on certain products are too high and unsustainable and The regulator does not yet have all the tools to limit the price increases in terms of the available budgetary envelope”
So, with more tools of coercion, everything will be better.
Meanwhile, for your investments, prefer companies that have nothing to do with the state and crony capitalism and operate in the most competitive markets.